Spending on Net ads jumps in 2003

Internet advertising rebounded sharply in 2003, led by growth in keyword search ads, according to a report released Wednesday by the Interactive Advertising Bureau.

U.S. companies spent $7.27 billion on online ads last year, according to the report, prepared by accounting company PricewaterhouseCoopers for the IAB. A preliminary version of the report was released in February.

The total for 2003 represents a 21 percent jump from 2002, when online ads slumped to $6.01 billion, but it's still below the dot-com peak of 2000, when online ad outlets raked in $8.09 billion.

"In light of a seeming malaise in the advertising industry at large, we are gratified that the dynamism that our industry continues to demonstrate is clearly not being lost on marketers and advertising agencies," IAB President Greg Stuart said in the report.

The report also showed strong quarterly growth, with the fourth quarter of 2003 coming in as the fifth consecutive quarter of growth, after more than two years of decline. Fourth-quarter revenue last year was $2.18 billion, compared with $1.79 billion in the previous quarter and $1.58 billion in the same period a year ago.

The report breaks down advertising revenue by categories, delivery methods and other critera. Keyword search advertising, in which companies pay to have their ads linked to certain search terms on sites such as Google, showed the strongest growth, accounting for 35 percent of all online advertising revenue in 2003. Keyword search accounted for only 15 percent of the market in 2002.

Most other advertising formats, including display ads and sponsorship advertising, showed slight to moderate declines.

Consumer goods--led by retail, automotive and travel--was the leading industry sector for online advertising, followed by computer products. Internet ads accounted for about 3 percent of total U.S. ad spending in 2003, ahead of billboards, but still far behind print vehicles such as newspapers, television and direct mail, which led the market at $49 billion.

CNET Networks, publisher of News.com, is a member of the IAB.