Online ad revenue passes the billion-dollar mark

Canadian online advertising revenues totalled more than $1 billion for the first time in 2006, according to the Interactive Advertising Bureau of Canada's 2006-2007 Canadian Internet Advertising Revenue Report.

According to the report, released today, revenues for online advertising reached $1.01 billion last year, an 80% increase over 2005 and 26% more than IAB Canada had projectedfor 2006.

"It's a really nice surprise, but something we've been working toward for a number of years," says Paula Gignac, president of IAB Canada.

Display advertising accounted for $364 million in revenues in 2006, 36% of the online total and a 58% increase over 2005. Search advertising was second with $353 million, a 79% increase, while classified and directory ads saw a 120% increase to $273 million. E-mail ad revenues, meanwhile, increased 82% to $20 million.

The automotive, financial and retail categories each accounted for 16% of online advertising revenues, with consumer packaged goods and the leisure industry following closely at 14% apiece.

The IAB Canada report pointed to several factors for the growth in revenues.

Strong results from online publishers of all sizes, an increase in the number of online ad formats and options, and the introduction of more online advertising networks in Canada all spurred growth, according to the release.

IAB Canada projects revenues to hit $1.3 billion in 2007, a 32% increase over 2006. While this projection suggests a slower growth rate, Gignac cautions it may be a conservative estimate.

"We've always exceeded our estimate, and the thing about the web is that it changes so quickly that we don't know today what the new thing in the next year is going to be," says Gignac. "The fact that networks came into the Canadian market, rich media really took off and video was added to the mix this year, those kinds of things can happen within 12 to 15 months. So I don't think you can say it's slowing down."

The Canadian Internet Advertising Revenue Report was compiled based on a survey of online publishers in Canada, with data collected and analyzed by Ernst & Young LLP.

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