Online ad spending booms to record $12.5bn

The amount of money spent on internet advertising in the US rose by 30 per cent last year to a record $12.5bn, according to a report released on Thursday by advertising trade group the Interactive Advertising Bureau and independent auditor PricewaterhouseCoopers.

Keyword search ads led the sector, representing 41 per cent market share and $5.1bn in revenue, followed by total display advertising, with 34 per cent market share and $4.3bn in revenue, and classified advertising with 17 per cent market share and $2.1bn in revenue.

Display advertising includes subgroups of display, sponsorship, slotting fees and rich media.

Nearly half (46 per cent) of the ad deals were cost-per-thousand impressions, which include display and banner ads, followed by performance deals, which include cost-per-click and cost-per-transaction, which accounted for 41 per cent of the online-advertising contracts.

In the fourth quarter of 2005, internet advertising revenue totalled $3.6bn, up 34 per cent from the year-earlier period.

Elinor Mills writes for CNET News.com