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One year on, and Web advert spending doubles

The Internet Advertising Bureau (IAB) in America said $423 million was spent on Internet advertising in the second quarter of 1998, although not everyone agrees with the figures.
Written by Martha L.Stone, Contributor

In reporting its numbers, the IAB said it was the ninth straight quarter of growth for online advertising, and represented a 97 per cent increase from the second quarter of 1997 (due to incorrect information supplied by the IAB's auditor, an earlier version of this story reported a 20 percent increase). But the numbers came under attack from outside analysts, who suggest the numbers are at least a third too high.

While the IAB says $774 million was spent on advertising in the first half of the year, and projects that nearly $2 billion will be spent this year, Chris Charron, an analyst at Forrester Research in projects only $1.3 billion will be spent this year on Internet advertising. But Evan Nuefeld, an analyst at Jupiter Communications in New York, says the IAB's projections of about $2 billion in ad spending for 1998 are close to Jupiter's $1.9 billion projection.

IAB officials expressed puzzlement that their numbers would cause controversy.

"I'm perplexed, confused and not clear on why people continue to think this data does not reflect the marketplace," said Rick LeFurgy, IAB chairman, on a conference call. "We do not associate with the advertisers, we don't report what sites are doing what, we have no incentive to fudge numbers."

"From the IAB's standpoint, we stand by our numbers," LeFurgy said. "If we felt the numbers were not accurate, we would not do this."

The arguments effectively make for a tempest in a teapot, as Web advertising makes up less than one percent of overall advertising spending.

The report, conducted and presented by PricewaterhouseCoopers at the IAB's annual membership meeting at @ad:tech's New York Forum, showed that computer and consumer advertising makes up about half of all Web ads. Most ads are banner ads, and an estimated 95 percent of the advertising is paid for by cash, while the remaining 5 percent are barters or trades, according to the report.

The "Advertising Revenue Report" was started by the IAB in 1996, and comprises data from more than 200 companies representing more than 1,200 Web sites.

The data is compiled directly from information supplied by companies selling advertising on the Internet, and includes online advertising revenues from Web sites, commercial online services, free e-mail providers and all other companies selling online advertising. The IAB said full details of the study will appear next week.

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