Spending on Web Ads Soars 42.7%

U.S. Internet ad revenue jumped to a record $2.37 billion in the second quarter, surpassing the highest levels reached during the dot-com era, according to a study released Monday.

Spending for online advertising surged 42.7% from the year-ago period as advertisers devoted a larger share of their media budgets to online media companies rather than traditional media outlets, according to a study compiled by the Interactive Advertising Bureau and PricewaterhouseCoopers.

“Internet advertising is without a question taking share from the other media at this time,” said Greg Stuart, chief executive of IAB.

The study cited several major advertisers that increased their online budgets for the year, including Ford’s Lincoln Mercury division, which is devoting 25% to online advertising.

Search engine-related ads, or paid search listings, remained the most popular form of advertising. They accounted for 40% of second-quarter ad revenue, up from an estimated 29% in the corresponding quarter last year.

However, industry analysts say growth in paid search listings is expected to cool over the next five years to about an 11% rate by 2009, compared with 65% in 2003.