Paid Search Increases Internet Advertising Revenue

Internet advertising spending rose 21 percent in 2003 with the help of paid search, according to an Internet Advertising Bureau (IAB)/PricewaterhouseCoopers report released this week.

Search advertising spending rose 182 percent from the previous year, consequently resulting in $7.3 billion in revenue for the Internet ad industry. Moreover, 35 percent of this total came directly from Search, a figure 20 percent above that of 2002.

The Internet Advertising Revenue Report also found that during the 2003 fourth quarter, keyword search ads accounted for 40 percent of the online ad industry’s $2.2 billion in sales.

“One of the interesting things about the keyword search sector is the way that it is bringing new advertisers online,” stated Danny Meadows-Klue of the UK Interactive Advertising Bureau to ElectricNewsNet. “Even one-person micro-businesses are spending on keywords. They are realizing that they can cheaply and directly reach a potential customer at the moment of greatest interest.”

Of the pricing models CPM continues to be the most popular with 43 percent of Search ad revenue while performance-based deals trail only slightly behind with 37 percent.

Although it has come a long way, Web advertising only accounts for approximately 3 percent of total ad spending in the U.S. in 2003.

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