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IAB Internet Advertising
Revenue Report
An Industry Survey Conducted by PricewaterhouseCoopers
and Sponsored by the Interactive Advertising Bureau (IAB)
2008 Full-Year Results
March 2009


Table of Contents
Background
2
Executive Summary
3
Detailed Findings
4
 2008 Fourth-Quarter and Full Year Results
 Annual and Quarterly Trends
 Industry Concentration
 Advertising Formats
 Industry Category Spending
 Pricing Models
Appendix
 Survey Scope and Methodology
 IAB Board Officers and Directors
 Organization Profiles
15
Background
About the IAB Internet Advertising Revenue Report
Conducted by PricewaterhouseCoopers LLP on an ongoing basis, with results released
quarterly, the “Internet Advertising Revenue Report” was initiated by the Interactive Advertising
Bureau (IAB) in 1996. This report utilizes data and information reported directly to
PricewaterhouseCoopers LLP, publicly available online corporate data and information provided
by online ad selling companies.
The results reported are considered the most accurate measurement of Internet/online
advertising revenues because the data is compiled directly from information supplied by
companies selling advertising online. All-inclusive, the report includes data reflecting online
advertising revenues from Web sites, commercial online services, ad networks and e-mail
providers, as well as other companies selling online advertising.
The report is conducted independently by PricewaterhouseCoopers LLP on behalf of the IAB.
PwC does not audit the information and provides no opinion or other form of assurance with
respect to the information. Only aggregate results are published and individual company
information is held in strict confidence with PricewaterhouseCoopers LLP. Further details
regarding scope and methodology are provided in the appendix to this report.
David Silverman
PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
2
Executive Summary
IAB Internet Advertising Revenue Report
2008 Full Year Highlights
Internet advertising revenues (“revenues”) in the United States totaled $23.4 billion for the full year of 2008,
with Q3 accounting for approximately $5.8 billion and Q4 totaling approximately $6.1 billion. Internet advertising
revenues for the full year of 2008 increased 10.6 percent over 2007.
Key trends underlying 2008 results
 Revenues Conti
nuetoPostRecor
dResults—Internet advertising revenue in the U.S. totaled $6.1 billion
in the fourth quarter of 2008, an increase of 4.5 percent from the 2008 third-quarter total of $5.8 billion, and
an increase of 2.6 percent from the 2007 fourth-quarter total of $5.9 billion. Full year Internet advertising
revenues of 2008 totaled $23.4 billion, up 10.6 percent from the $21.2 billion reported in 2007.
“We are seeing an ongoing secular shift from traditional to online media as marketers recognize that ad
dollars invested in interactive media are effective at influencing consumers and delivering measurable
results. In this uncertain economy, where marketers know they need to do more with less, interactive
advertising provides the tools for them to build deep, engaging relationships with consumers—the
experience marketers gain from this will deliver dividends especially after the economy turns around.”
—Randall Rothenberg, President and CEO, IAB
 Sea
r
chConti
nues toLea
d,
f
ollow edbyDi
spla
yBa
nner
sa
ndCla
ssi
f
i
eds—Search revenue accounted
for 46 percent of 2008 fourth-quarter revenues, up from the 42 percent reported in 2007. Display Banner
advertising, the second largest format, accounted for 21 percent, followed by Classifieds (13 percent), Lead
Generation (7 percent) and Rich Media (7 percent) of 2008 fourth-quarter revenues.
“Though some categories in the fourth quarter slowed or even dipped, reflecting the current economic
challenges, the overall performance is up, confirming interactive’s ever-growing importance to the
successful marketing mix.”
—David Silverman, Partner, PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
3
Detailed Findings
Revenues Totaled $6.1 Billion in the Fourth Quarter of 2008
Online ad sellers reported aggregate revenues totaling $6.1 billion for the fourth quarter of 2008.
 Total 2008 fourth-quarter revenues were $154 million (2.6 percent) higher than the fourth quarter of 2007, and
$263 million (4.5 percent) higher than the third quarter of 2008.
2007 Q4 vs. 2008 Q4
$7,000
$ millions
$6,000
$6,100
$5,946
2.6%
$5,000
$4,000
$3,000
$2,000
$1,000
$0
2007 Qtr 4
2008 Qtr 4
2008 Q3 vs. 2008 Q4
$7,000
$ millions
$6,000
$5,838
4.5%
$6,100
$5,000
$4,000
$3,000
$2,000
$1,000
$0
2008 Qtr 3
PricewaterhouseCoopers LLP
2008 Qtr 4
4
2008 Annual Revenues Totaled Over $23 Billion
 Annual revenues for 2008 totaled $23.4 billion, $2.2 billion or 10.6 percent higher than reported for 2007.
Annual Revenues — 2007 vs. 2008
$23,448
10.6%
$21,206
$ millions
$20,000
$15,000
$10,000
$5,000
$0
2007
2008
Historical Revenue Mix First Half vs. Second Half
 With a continuous weakening in the economic environment, the second half percentage mix saw a decline to 51%.
This was the lowest percentage mix for the second half since 2002.
$23.4B
$24,000
$22,000
$21.2B
$20,000
$18,000
$16.9B
$11,938
$ millions
$16,000
$12.5B
$14,000
$8,970 53%
$12,000
$9.6B
$10,000
$4,000
$7.1B
$4,074
$4.6B
$3,414
$4,013
$1,627
1999
$7.3B
$6.0B
48%
$3,975
50%
$3,720
35%
2000
2001
52%
$2,978
52%
$9,993
50%
50%
$3,292
2002
First Six Months
PricewaterhouseCoopers LLP
$5,027
55%
65%
$2,000
$0
50%
$3,032
$2,994
54%
$6,755
$8.1B
$8,000
$6,000
51%
$11,213 53%
2003
45%
$4,599
2004
48% $5,787
46%
2005
$7,909
2006
$11,510
49%
47%
47%
2007
2008
Last Six Months
5
Annual Revenue Trends
 Annual revenues have increased significantly on a year-over-year percentage and dollar basis for the sixth consecutive
year, after declining in 2001 and 2002.
Annual $ Revenue — 1997 through 2008
$25,000
$23,448
$21,206
$ millions
$20,000
$16,879
$15,000
$12,542
$9,626
$10,000
$8,087
$7,267
$7,134
$6,010
$4,621
$5,000
$1,920
$907
$0
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Historical Quarterly Revenue Trends
 Since the third quarter of 2002, revenues have increased 22 of the past 25 consecutive quarters.
 Quarterly Revenue growth remains strong on a cumulative year-over-year percentage and dollar basis.
 Seasonal 2008 fourth quarter lift of 4.5% is the smallest such increase since 2001.
Quarterly $ Revenue Growth Comparisons — 2000-2008
$
8,
0
87
$
7
,
1
34
$
6,
0
1
0
$
7
,
267
$
9
,
626
$
1
2,
542
$
1
6,
87
9
$
23,
448
$
21
,
20
6
$ 5, 946
$ 5, 765
$6,000
$ 6, 100
$ 5, 838
$ 5, 094
$ 5, 745
$ 5, 267
$ millions
$5,000
$ 4, 061
$ 4, 899
$ 4, 784
$ 4, 186
$4,000
$ 3, 608
$ 3, 848
$ 2, 985
$3,000
$ 2, 694
$ 3, 147
$ 2, 369
$ 2, 091
$2,000
$1,000
$ 2, 182
$ 1, 872
$ 2, 802
$ 1, 848
$ 1, 660
$ 1, 641 $ 1, 458 $ 1, 580
$ 2, 230
$ 1, 922 $ 1, 951
$ 2, 123 $ 1, 773
$ 1, 793
$ 1, 520
$ 1, 632
$ 1, 451
$ 2, 182
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
20
0
0
PricewaterhouseCoopers LLP
20
0
1
20
0
2
20
0
3
20
0
4
20
0
5
20
0
6
20
0
7
20
0
8
6
Historical Revenue Performance
 Annual and Quarterly Revenue Growth Comparisons
% G ROW TH
% G ROW TH
$
RevMilli
ons
Qtr
/
Qtr
1Q03
$1,632
3%
7%
313%
2Q03
$1,660
2%
14%
6%
200%
3Q03
$1,793
8%
24%
48%
205%
4Q03
$2,182
22%
38%
239%
Tota
l20
0
3
$
7
,
267
5%
171%
1Q04
$2,230
2%
37%
$423
20%
97%
2Q04
$2,369
6%
43%
3Q98
$491
16%
116%
3Q04
$2,333
-2%
30%
4Q98
$656
34%
95%
$2,694
$
9
,
626
15%
1
1
2%
4Q04
Tota
l20
0
4
24%
33%
$
RevMilli
ons
Qtr
/
Qtr
Yea
r
/
Yea
r
1Q97
$130
18%
333%
2Q97
$214
66%
3Q97
$227
4Q97
$336
Tota
l1
9
9
7
$
9
0
7
1Q98
$351
2Q98
Tota
l1
9
9
8
$
1
,
9
20
Yea
r
/
Yea
r
21
%
1Q99
$693
6%
97%
1Q05
$2,802
4%
25%
2Q99
$934
35%
121%
2Q05
$2,985
7%
26%
3Q99
$1,217
30%
148%
3Q05
$3,147
5%
35%
4Q99
$1,777
46%
171%
4Q05
$3,608
15%
34%
Tota
l1
9
9
9
$
4,
621
1
41
%
Tota
l20
0
5
$
1
2,
542
1Q00
$1,922
8%
177%
1Q06
$3,848
7%
37%
2Q00
$2,091
9%
123%
2Q06
$4,061
6%
36%
3Q00
$1,951
-7%
60%
3Q06
$4,186
3%
33%
4Q00
$2,123
9%
19%
4Q06
$4,784
14%
33%
Tota
l20
0
0
$
8,
0
87
7
5%
Tota
l20
0
6
$
1
6,
87
9
1Q01
$1,872
-12%
-3%
1Q07
$4,899
2%
27%
2Q01
$1,848
-1%
-12%
2Q07
$5,094
4%
25%
3Q01
$1,773
-4%
-10%
4Q01
$1,641
-7%
-23%
$
7
,
1
34
1Q02
$1,520
-7%
-19%
$5,267
$5,946
$
21
,
20
6
$5,765
3%
13%
Tota
l20
0
1
3Q07
4Q07
Tota
l20
0
7
1Q08
-3%
26%
24%
26%
18%
2Q02
$1,458
-4%
-21%
2Q08
$5,745
0%
13%
3Q02
4Q02
Tota
l20
0
2
$1,451
$1,580
$
6,
0
1
0
-1%
9%
-18%
-4%
1
6%
3Q08
$5,838
2%
11%
4Q08
$6,100
4%
Tota
l20
0
8
$23,448
1
2%
30
%
35%
2%
1
1
%
Industry Revenue Concentration Remains High
 Online advertising continues to remain concentrated with the ten leading ad-selling companies, which accounted
for 72 percent of total revenues in the fourth quarter of 2008, up slightly from the 69 percent reported for the fourth
quarter of 2007.
 Companies ranked 11th to 25th accounted for 11 percent of revenues for the fourth quarter of 2008, compared to
the 12 percent reported in the fourth quarter of 2007. Companies ranked 26th to 50th accounted for 8 percent,
compared to the 9 percent reported in 2007.
% Share of total revenues
100
90
TOP 50
91%
80
% of Total
TOP 25
83%
70
60
50
72%
40
30
Top 50
companies
command
90% of online
ad market
TOP 10
20
10
7
,
1
34M
$
8,
0
87M $
$
6,
0
1
0M
$
7
,
267M
$
9
,
626 M
$
1
2,
542 M
$
1
6,
87
9M
$
21
,
20
6M
$
23,
448M
0
Q1
Q2Q3Q4Q1
Q2Q3Q4Q1
Q2Q3Q4Q1
Q2Q3Q4Q1
Q2Q3Q4Q1
Q2Q3Q4Q1
Q2Q3Q4Q1
Q2Q3Q4Q1
Q2Q3 Q4
20
0
0
20
0
1
20
0
2
20
0
3
20
0
4
20
0
5
20
0
6
20
0
7
20
0
8
PricewaterhouseCoopers LLP
7
Search, Display and Classifieds Lead Ad Formats – 2008 Fourth Quarter Results
 Search revenues accounted for 46 percent of 2008 Q4 revenues, up from the 42 percent reported for the same period in
2007. Search revenues totaled $2.8 billion in the fourth quarter of 2008, up 13 percent from the fourth quarter of 2007,
when Search revenues totaled $2.5 billion.
 Display-related advertising accounted for $2.0 billion or 33 percent of total revenues during the fourth quarter of 2008,
down nearly 4.3 percent from the $2.1 billion (35 percent of total) reported in the fourth quarter of 2007. Display-related
advertising includes Display Banner Ads (21% of 2008 Q4 revenues or $1.3 billion), Rich Media (7% or $434 million),
Digital Video (3% or $207 million), and Sponsorship (1% or $87 million).
 Classifieds revenues totaled $769 million or 13 percent of 2008 fourth-quarter revenues, down 8 percent from the $832
million (14 percent of total) reported in the fourth quarter of 2007.
 Lead Generation revenues accounted for 7 percent of the 2008 fourth-quarter revenues or $433 million, up 4 percent from
the $416 million (7 percent) reported in the fourth quarter of 2007.
Internet Ad Revenues by Advertising Format – 2008 Fourth Quarter Results
% of20
0
8Four
thQua
r
terRevenues
Rich Media*
7%
Digital Video*
3%
Banner Ads*
21%
Lead Generation
7%
E-mail
1%
Sponsorship*
1%
Classifieds
13%
Search
46%
Tota
l–$
6.
1
Bi
lli
on
% of20
0
7Four
thQua
r
terRevenues
Rich Media*
9%
Digital Video*
2%
Lead Generation
7%
E-mail
2%
Banner Ads*
21%
Sponsorship*
3%
Classifieds
14%
Search
42%
Tota
l–$
5.
9Bi
lli
on
* Display Related Advertising includes Rich Media, Digital Video, Banner Ads, and Sponsorship
PricewaterhouseCoopers LLP
8
Search, Display and Classifieds Lead Ad Formats – 2008 Full Year Results
 Search remains the largest revenue format, accounting for 45 percent of 2008 full year revenues, up from the 41 percent
reported in 2007. Search revenues totaled $10.5 billion for the full year 2008, up 20 percent from the $8.8 billion reported
in 2007.
 Display-related advertising revenues totaled $7.6 billion or 33 percent of full year 2008 revenues, up nearly 8 percent from
the $7.1 billion (34 percent of total) reported in 2007. Display-related advertising includes Display Banner Ads (21% of
2008 full year revenues or $4.9 billion), Rich Media (7% or $1.6 billion), Digital Video (3% or $734 million), and
Sponsorship (2% or $387 million).
 Classifieds revenues accounted for 14 percent of 2008 full year revenues or $3.2 billion, down 4 percent from the $3.3
billion (16 percent of total) reported in 2007.
 Lead Generation revenues accounted for 7 percent of 2008 full year revenues or $1.7 billion, up 6 percent from the $1.6
billion (7 percent) reported in 2007.
Internet Ad Revenues by Advertising Format – 2008 Annual Results
% of20
0
8FullYea
rRevenues
Digital Video*
3%
Rich Media*
7%
Lead Generation
7%
E-mail
2%
Banner Ads*
21%
Sponsorship*
2%
Classifieds
14%
Search
45%
Tota
l–$
23.
4Bi
lli
on
% of20
0
7FullYea
rRevenues
Rich Media* Digital Video*
8%
2%
Lead Generation
7%
E-mail
2%
Banner Ads*
21%
Sponsorship*
3%
Classifieds
16%
Search
41%
Tota
l–$
21
.
2 Bi
lli
on
* Display Related Advertising includes Rich Media, Digital Video, Banner Ads, and Sponsorship
PricewaterhouseCoopers LLP
9
Historical Format Trending
 Search has remained the leading format since 2004, and has had strong sequential growth over this period. Search is
followed by Display Banners and Classifieds/Directories in percentage share of Internet advertising.
 Of the 5 major format categories depicted, only two have seen sustained losses in percentage share. Sponsorship
revenues have dipped from 8% of total revenues in 2004 to 2% of total revenues in 2008, while Classifieds/Directories
revenues have dropped from 18% of total in 2004 to 14% in 2008.
Internet Ad Revenue Share by Advertising Format – 2004 – 2008*
50%
45%
% ofTota
lRevenue
40%
35%
30%
25%
20%
15%
10%
5%
0%
Search
Display B anners
FY 2004
Classifieds
FY 2005
Rich M edia and
Digital Video
FY 2006
Lead
Generatio n
FY 2007
Spo nso rships
FY 2008
*Format definitions may have changed over time period depicted, both within the survey process and definitionally by survey respondents.
PricewaterhouseCoopers LLP
10
Retail Advertisers Continue to Drive Consumer Ad Spending – 2008 Annual Results
 Retail advertisers continue to represent the largest category of Internet ad spending, accounting for 22 percent of revenues
for the full year of 2008 or $5.0 billion, down from the 25 percent ($5.4 billion) reported in 2007.
 Financial Services advertisers represented the second-largest category of spending at 13 percent of 2008 full year
revenues or $3.0 billion, down from the 15 percent ($3.2 billion) reported in 2007.
 Automotive advertisers accounted for the third-largest category of spending at 12 percent of 2008 full year revenues or
$2.8 billion, up slightly from the 12 percent ($2.5 billion) reported in 2007.
 Computing advertisers represented the fourth-largest category of spending at 12 percent of 2008 full year revenues or $2.7
billion, up slightly from the 11 percent reported ($2.3 billion) for the full year of 2007.
 Telecom companies accounted for 9 percent of 2008 full year revenues or $2.0 billion, up slightly from the 8 percent ($1.7
billion) reported in 2007, while Leisure Travel (airfare, hotels & resorts) accounted for 6% of revenues ($1.4 billion)
compared to the 7 percent or $1.5 billion reported in 2007.
 Media accounted for 5 percent of revenues for the full year of 2008 or $1.3 billion, down slightly from the 6 percent ($1.3
billion) reported in 2007.
 Consumer Packaged Goods and Food Products represented 6 percent of full year revenues ($1.5 billion) up from the 4%
or $925 million reported in 2007. Entertainment accounted for at 4% of 2008 full year revenues ($917 million), down
slightly from the 5% ($1.0 billion) reported in 2007.
Internet Ad Revenues by Major Industry Category*
2008 Full Year ($23.4B) vs. 2007 Full Year ($21.2B)
25%
22%
20%
% of total revenues
15%
13%
11%
12%
12% 12%
10%
8%
9%
7%
6%
6%
6%
5%
4%
5%
4%
4% 4%
0%
Retail
Financial
Services
Computing
Automotive
Telecom
2007 Full Year
Leisure Travel
Media
Consumer
Packaged
Goods
Entertainment
Pharma &
Healthcare
2008 Full Year
* Categories listed represent the top categories ranked by revenue, and may not add up to 100 percent. Prior reports included Retail, Automotive, CPGs, Leisure Travel and
Entertainment as components of Consumer-Related Advertising. Categories have been updated during 2008 survey process, please see pg. 16 for information on updated
categories.
PricewaterhouseCoopers LLP
11
Performance-Based Pricing Gains
 Approximately 57 percent of 2008 full year revenues were priced on a performance basis, up from 51 percent
reported in 2007.
 Approximately 39 percent of 2008 full year revenues were priced on a CPM or impression basis, down from
45 percent in 2007.
 Approximately 4 percent of 2008 full year revenues were priced on a hybrid basis, consistent with the 4 percent
reported for the same period in 2007.
Internet Ad Revenues by Pricing Model
% of20
0
8Four
thQua
r
terRevenues
% of20
0
7Four
thQua
r
terRevenues
Hybrid
4%
Hybrid
4%
CPM
39%
CPM
45%
Performance
51%
Performance
57%
Tota
l–$
6.
1
Bi
lli
on
Tota
l–$
5.
9Bi
lli
on
% of20
0
8FullYea
rRevenues
% of20
0
7FullYea
rRevenues
Hybrid
4%
Hybrid
4%
CPM
39%
CPM
45%
Performance
51%
Performance
57%
Tota
l–$
23.
4Bi
lli
on
PricewaterhouseCoopers LLP
Tota
l–$
21
.
2 Bi
lli
on
12
Historical Pricing Model Trends
 Performance based pricing, the most prevalent pricing model since 2006, has maintained a strong sequential growth rate
and is closely followed by CPM/Impression based pricing. Hybrid pricing has seen the greatest loss in percentage revenue
over the period, dipping sharply from 17% in 2004 to 4% in the full year of 2008.
Internet Ad Revenues by Pricing Model – 2004 – 2008*
60%
57%
48%
50%
46%
% ofTota
lRevenues
42%
40%
41%
CPM
47%
51%
45%
41%
Per
f
or
ma
nce
39%
30%
20%
17%
Hy
br
id
13%
10%
5%
4%
4%
0%
FY 2004
FY 2005
CPM
FY 2006
Perf ormance
FY 2007
FY 2008
Hy brid
*Pricing model definitions may have changed over time period depicted, both within the survey process and definitionally by survey respondents.
PricewaterhouseCoopers LLP
13
Cross Media Advertising Marketshare
 The Internet has continued to grow in significance when compared to other ad-supported media.
U.S. Advertising Market – Media Comparison – 2008 ($ Billions)
Ne
w s pa
pe
r
s
$34.4
TV Di
st
r
i
but
i
on
$28.8
I
nt
e
r
ne
t
$23.4
TV N e
t
w or
k
s:Ca
bl
e
$21.4
$17.2
Ra
di
o
TV N e
t
w or
k
s:Br
oa
dca
s tNe
t
w or
k
$18.0
Cons ume
rMa
g
a
zi
ne
s
$12.7
Di
r
e
c
t
or
y
$13.8
Tr
a
deAdve
r
t
i
si
ng
$10.0
$7.2
OutofH ome
$
-
$
1
0
$
20
$
30
$
40
$
50
*The total U.S. advertising market includes other segments not charted here.
*“TV Distribution” includes national and local TV station ads as well as multichannel system ads.
Sources: IAB Internet Ad Revenue Report; PricewaterhouseCoopers Global Entertainment and Media Outlook
Initial Year Growth Comparisons–Internet Advertising vs. Broadcast and
Cable Television
 The first 14 years of Internet Advertising (1995-2008) were charted against broadcast television (1949-1962) and cable
television (1980-1993), presented in current inflation-adjusted dollars.
 Internet Advertising revenues continue to far outpace the growth of Cable Television and Broadcast Television during each
of their first 14 years.
Annual $ Ad Revenue Growth—First 14 Years
$24,000
$
23,
448
$
21
,
20
6
$21,000
$18,000
$
1
6,
87
9
$15,000
$ millions
$
1
2,
542
$12,000
$
9
,
626
$9,000
$
8,
0
87
$
7
,
267
$
7
,
1
34
$
6,
0
1
0
$6,000
$3,000
$
1
3,
259
$
4,
621
$
55
$
267
$
9
0
7
$
1
,
9
20
$
5,
0
30
$
3,
69
8
$
358
$
1
,
0
1
2
$
2,
1
62
$
2,
7
87
$
1
47
$
29
5
$
49
9
$
7
45
$
1
,
1
9
0
$
1
,
580
$
6,
557
$
8,
1
88
$
7
,
885
$
8,
859
$
9
,
7
66
$
1
0
,
87
0
$
1
1
,
7
1
7
$
1
,
853
$
2,
0
80
$
2,
49
5
$
3,
1
80
$
3,
654
$
4,
0
59
$
4,
81
6
$
6,
50
1
Year 7
Year 8
Year 9
Year 10
Year 11
Year 12
Year 13
Year 14
$0
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Broadcast
Cable
Internet
Sources: IAB Internet Ad Revenue Report; PricewaterhouseCoopers LLP, Universal McCann
PricewaterhouseCoopers LLP
14
Appendix
Definitions of Leading Industry Categories
The industry categories used in the IAB Internet Advertising Revenue Report were sourced from
the North American Standard Industrial Classification (SIC) Manual.†
Retail—includes mail order/catalog, apparel, restaurants/fast food, home furnishings/textiles,
toys, pet food/supplies, appliances, jewelry, drug stores, retail stores and cosmetics.
Automotive—includes all automotive-related categories including sale/purchase of vehicles
and parts and maintenance.
Entertainment—includes film, music, TV, box office, video games and amusement &
recreation.
Consumer Packaged Goods—includes packaged goods, food products household
products and tobacco.
Leisure Travel—includes travel, hotel, airlines and resorts.
Computing Products—includes hardware (computers, computer storage devices, and
computer peripheral equipment), consumer electronics, prepackaged software (operating, utility
and applications programs), local area network systems and network systems integration,
computer processing and data preparation and data processing services.
Financial Services—includes commercial banks, credit agencies, personal credit institutions,
consumer finance companies, loan companies, business credit institutions and credit card
agencies. Also includes companies engaged in the underwriting, purchase, sale or brokerage of
securities and other financial contracts.
Telecommunications—includes point-to-point communications services, including telephone
voice and data communications, two-way mobile/cellular communications services and other
non-vocal message communications services (e.g., cablegram, electronic mail and facsimile).
Media—includes establishments primarily engaged in radio and television broadcasting
(network and station) including commercial, religious, educational and other radio or television
stations. Includes multi-channel video providers on a subscription fee basis (e.g., cable
television, wireless cable television and direct broadcast satellite services). Also includes
establishments primarily engaged in publishing newspapers, periodicals and books.
†Survey
participants reported results based on the 21 industry categories listed on page 17, which
were used specifically for the IAB Internet Advertising Revenue Report. This is consistent with other
relevant industry categorization sources that measure advertising spending by industry. For
purposes of this report, PricewaterhouseCoopers classified a number of individual categories under
“Retail.”
PricewaterhouseCoopers LLP
15
Definitions of Advertising Formats
Display Advertising (Banner Ads)—advertiser pays an Internet company for space to display a static or hyper-linked
banner or logo on one or more of the Internet company’s pages.
Sponsorship—represents custom content and/or experiences created for an advertiser which may or may not include ad
elements such as display advertising, brand logos, advertorial or pre-roll video. Sponsorships fall into several categories:
 Spotlights are custom built pages incorporating an advertiser’s brand and housing a collection of content usually around a
theme;
 Advergaming can range from an advertiser buying all the ad units around a game or a “sponsored by” link to creating a
custom branded game experience;
 Content & Section Sponsorship is when an advertiser exclusively sponsors a particular section of the site or email (usually
existing content) re-skinned with the advertiser’s branding;
 Sweepstakes & Contests can range from branded sweepstakes on the site to a full-fledge branded contest with
submissions and judging
E-mail—banner ads, links or advertiser sponsorships that appear in e-mail newsletters, e-mail marketing campaigns and
other commercial e-mail communications. Includes all types of electronic mail (e.g., basic text or HTML-enabled).
Search—fees advertisers pay Internet companies to list and/or link their company site domain name to a specific search
word or phrase (includes paid search revenues). Search categories include:
 Pa
i
dli
sti
ngs—text links appear at the top or side of search results for specific keywords. The more a marketer pays, the
higher the position it gets. Marketers only pay when a user clicks on the text link.
 Contex
tua
lsea
r
ch—text links appear in an article based on the context of the content, instead of a user-submitted
keyword. Payment only occurs when the link is clicked.
 Pa
i
di
nclusi
on—guarantees that a marketer’s URL is indexed by a search engine. The listing is determined by the
engine's search algorithms.
 Si
teopti
mi
za
ti
on—modifies a site to make it easier for search engines to automatically index the site and hopefully result
in better placement in results.
Lead Generation—fees advertisers pay to Internet advertising companies that refer qualified purchase inquiries (e.g., auto
dealers which pay a fee in exchange for receiving a qualified purchase inquiry online) or provide consumer information
(demographic, contact, behavioral) where the consumer opts into being contacted by a marketer (email, postal, telephone,
fax). These processes are priced on a performance basis (e.g., cost-per-action, -lead or -inquiry), and can include user
applications (e.g., for a credit card), surveys, contests (e.g., sweepstakes) or registrations.
Classifieds and auctions—fees advertisers pay Internet companies to list specific products or services (e.g., online job
boards and employment listings, real estate listings, automotive listings, auction-based listings, yellow pages).
Rich media—advertisements that incorporate animation, sound, and/or interactivity in any format. It can be used either
singularly or in combination with the following technologies: sound, Flash, and with programming languages such as Java,
JavaScript, and DHTML. It is deployed via standard Web and wireless applications including e-mail, static (e.g. .html) and
dynamic (e.g. .asp) Web pages, and may appear in ad formats such as banners, buttons and interstitials. Interstitials are
included in the rich media category and represent full- or partial-page text and image server-push advertisements which
appear in the transition between two pages of content. Forms of interstitials can include splash screens, page takeovers and
pop-up windows.
Digital Video Commercials—TV-like advertisements that may appear as in-page video commercials or before, during,
and/or after a variety of content in a player environment including but not limited to, streaming video, animation, gaming, and
music video content. This definition includes digital video commercials that appear in live, archived and downloadable
streaming content.
PricewaterhouseCoopers LLP
16
Survey Scope
The Interactive Advertising Bureau (IAB) retained PricewaterhouseCoopers to establish a comprehensive standard for
measuring the growth of Internet/online advertising revenues.
 The IAB Internet Advertising Revenue Report is part of an ongoing IAB mission to provide an accurate barometer of
Internet advertising growth.
 To achieve differentiation from existing estimates and accomplish industry-wide acceptance, key aspects of the survey
include:
– Obtaining historical data directly from companies generating Internet/online advertising revenues;
– Making the survey as inclusive as possible, encompassing all forms of Internet/online advertising, including Web sites,
consumer online services, ad networks and e-mail providers; and
– Ensuring and maintaining a confidential process, only releasing aggregate data.
Methodology
 PricewaterhouseCoopers:
– Compiles a database of industry participants selling Internet/online advertising revenues.
– Conducts a quantitative mailing survey with leading industry players, including Web publishers, ad networks,
commercial online service providers, e-mail providers and other online media companies.
– Supplemental Data is acquired through the use of publicly disclosed information
– Requests and compiles several specific data items, including monthly gross commissionable advertising revenue by
industry category and transaction.
– Identifies non-participating companies and applies a conservative revenue estimate based on available public sources.
– Analyzes the findings, identifies and reports key trends.
– The 2001 and 2000 full-year revenue data were adjusted to reflect revenue restatements reported in public filings by
several individual companies. Those reported restatements totaled $77 million in 2001 and $138 million in 2000.
Historical industry revenue figures are now adjusted to $7.134 billion in 2001 and $8.087 billion in 2000.
Survey Industry Categories
Entertainment (Film, Music, TV, Box
Office, Video Games,
Amusement/Recreational)
Professional Sports and Sporting &
Athletic Goods
Business Products/Services
Financial Services (Banks, Insurance,
Securities, Mortgages)
Restaurants/ Fast food
Computers (Hardware/Software) and
Consumer Electronics
Health Care Products and
Services/Pharmaceuticals
Consumer Packaged Goods and
Food Products
Internet/ISP/E-commerce
Toys/Games
Manufacturing
Leisure Travel (Airfare, Hotels, Resorts)
Media
Business Travel (Airfare, Hotels, Resorts)
Automotive
Beer/Wine/Liquor
Beverages (Non-Alcoholic)
Educational Services
PricewaterhouseCoopers LLP
Real Estate
Retail and Apparel
Telecommunications
17
Overall Report Guidance Provided by IAB Leadership
Executive Committee
Chair
W endaH a
r
r
is Milla
r
d
Martha Stewart Living Omnimedia
President
Ra
nda
llRothenber
g
IAB
Vice Chair
Da
vidMoor
e
24/7 Real Media
Tim A r
ms tr
ong
Google
Ma
r
tin Ni
s enholtz
New York Times Company
SteveW a
dsw or
th
Disney Interactive Media Group
NeilA s he
CBS Interactive
Jim Spa
nf
eller
Forbes.com
Board of Directors
Tim A r
ms tr
ong
Google
PeterH or
a
n
Goodmail Systems
Ra
nda
llRothenber
g
Interactive Advertising Bureau
NeilA s he
CBS Interactive
ScottH ow e
Microsoft
Wa
r
r
en Schlichti
ng
Comcast Spotlight
John Ba
ttelle
Federated Media
Ra
ndyKilgor
e
Tremor Media
VivekSha
h
Time Inc.
Jef
fBer
ma
n
Fox Interactive Media/MySpace
Leon Levitt
Cox Newspapers
TinaSha
r
k
ey
BabyCenter
BobCa
r
r
iga
n
IDG Communications
Chr
is Ma
The Washington Post Company
Ta
dSmith
Reed Business
Sa
r
a
hChubb
CondéNast Digital
Da
veMa
dden
WildTangent
Jim Spa
nf
eller
Forbes.com
Gr
egColema
n
AOL/Platform A
Gr
egMcCa
s tle
AT&T Converged Services
Na
daStir
r
a
t
MTV Networks
Kevin Conr
oy
Univision
RileyMcDonough
Thomson Reuters
BillTodd
ValueClick
Gr
egD’
A lba
CNN
G or
don McLeod
Wall Street Journal Digital Network
SteveW a
dsw or
th
Disney Interactive Media Group
Jona
tha
n Ew er
t
LookSmart
W endaH a
r
r
is Milla
r
d
Martha Stewart Living Omnimedia
Mik
eW a
lr
a
th
Yahoo!
JoeFivea
sh
Weather Channel Interactive
Da
vidMoor
e
24/7 Real Media
Jef
fW ebber
USAToday
MitchG olub
cars.com
PeterNa
y
lor
NBC Universal
Ma
ttW i
se
Q Interactive
Ja
ckG r
if
f
in
Meredith
Ma
r
tin Ni
s enholtz
NY Times Company
Ex-Officio
Treasurer
Br
uceG or
don
Disney Interactive Media Group
Secretary
Jos ephRos enba
um
Reed Smith LLP
Founding Chairman
RichLeFur
gy
Archer Advisors
Da
veMor
ga
n
TENNIS.COM
About the Interactive Advertising Bureau
The Interactive Advertising Bureau (IAB) is comprised of more than 375 leading media and technology companies who are responsible for
selling 86% of online advertising in the United States. On behalf of its members, the IAB is dedicated to the growth of the interactive
advertising marketplace, of interactive’s share of total marketing spend, and of its members’ share of total marketing spend. The IAB
educates marketers, agencies, media companies and the wider business community about the value of interactive advertising. Working
with its member companies, the IAB evaluates and recommends standards and practices and fields critical research on interactive
advertising. Founded in 1996, the IAB is headquartered in New York City with a Public Policy office in Washington, D.C. For more
information, please visit www.iab.net.
PricewaterhouseCoopers LLP
18
PricewaterhouseCoopers
New Media Group
PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and
advisory services to build public trust and enhance value for its clients and stakeholders. More
than 154,000 people in 153 countries share their thinking, experience and solutions to develop
fresh perspectives and practical advice.
© 2008 PricewaterhouseCoopers LLP. All rights reserved. "PricewaterhouseCoopers" refers to
PricewaterhouseCoopers LLP or, as the context requires, the PricewaterhouseCoopers global
network or other member firms of the network, each of which is a separate and independent
legal entity.
PricewaterhouseCoopers’ New Media Group was the first practice of its kind at a Big Four firm.
Currently located in New York, Los Angeles, Boston, Seattle and the Bay Area, our New Media
Group includes accounting, tax and consulting professionals who have broad and deep
experience in the three areas that converge to form new media: advanced telecommunications,
enabling software and content development/distribution.
Our services include:
 Business assurance services
 Web audience measurement and advertising delivery auditing and advisory
 IAB Measurement Certification Compliance auditing
 Privacy policy structuring, attestation and compliance advisory
 Mergers & Acquisition assistance
 Tax planning and compliance
 Capital sourcing and IPO assistance
For information about our New Media Group, contact one of the following
PricewaterhouseCoopers LLP professionals:
New York
Da
vidSilver
ma
n
Partner, Assurance Services
646.471.5421
[email protected]
Boston
VicPetr
i
Partner, Assurance Services
617.478.1698
[email protected]
Rus s Sa
pienza
Partner, Advisory Services
646.471.1517
[email protected]
San Jose
Mik
ePea
r
l
Partner, Assurance Services
408.817.3801
[email protected]
Seattle
Suza
nneFa
ulk
ner
Partner, Assurance Services
206.398.3550
[email protected]
PricewaterhouseCoopers LLP
19
pwc.com/e&m
NY-GR-08-0221-A © 2008 PricewaterhouseCoopers LLP. All rights reserved. “PricewaterhouseCoopers” refers to PricewaterhouseCoopers LLP (a
Delaware limited liability partnership) or, as the context requires, the PricewaterhouseCoopers global network or other member firms of the network,
each of which is a separate and independent legal entity.