US Online Advertising Rockets

Online advertising spending leapt by nearly a third last year as the internet continued to gain ground over television, newspapers and other traditional media.

Advertisers spent a record $10bn (£5.24bn) online in 2004 in the US, the largest amount since the heady days of the doctcom boom five years ago, according to the Interactive Advertising Bureau and Price Waterhouse Coopers.

Spending grew by 32% last year nearly six times faster than the overall US advertising market, which rose by just 5.6% last year.

Spending shot up from the $7.3bn advertisers spent online in 2003 and eclipsed the $8.1bn companies lavished on the internet in 2000.

While online sales fell off a cliff soon after the dotcom bubble burst, since the end of 2002 the value of internet ads has grown steadily.

In the last three months of 2004 alone, advertisers spent $2.2bn online, the ninth successive quarter of online growth.

The success of online advertising last year means that it has now overtaken the domestic US box office in value terms. Last year American filmgoers spent $9.35bn going to the movies, while advertisers spent $9.6bn online.

A recent survey by Jupiter Research predicts that online advertising will overtake magazine advertising in the US some time in 2007.

Last year's 32% rise in US online spending dwarfs the 5% increase in magazine revenues last year and is more than double the 14% growth rate enjoyed by cable TV.

A complete report from the IAB and PWC detailing how much advertisers spent on categories such as clothes, cars and consumer electronics is due out later this year.