Online ad market: More blistering growth

ONLINE advertising revenue in the US jumped 34 per cent in 2006 to US$16.8 billion, continuing four years of record growth, a report from the Interactive Advertising Bureau and PricewaterhouseCoopers found.

Internet advertising has continued it run of quarter on quarter growth started in mid-2002, with growth rates accelerating in the past two years.

The report put advertising revenue for the fourth quarter last year at US$4.8 billion, a 15 per cent increase over the US$4.15 billion achieved by the industry in Q3.

“Results for 2006 confirm a very healthy environment for online advertising,” said PricewaterhouseCoopers partner David Silverman.

“All signs point to a steady increase in the level of spend by traditional advertisers that are using online advertising as an important part of their media mix.”

“The continued growth in Interactive advertising is clearly based on marketers' recognition that they connect with consumers most effectively through interactive media,” IAB chief executive Randall Rothenberg said.

“The increase underscores marketers' understanding that Interactive advertising can engage consumers, build brands and sell products and services.”

PricewaterhouseCoopers director Peter Petrusky said “online advertisers continue to test how to use the internet with other media to leverage a combination of consumer touch points across different media.”

The 2006 fourth quarter and full year online ad revenue figures were estimated by surveying and aggregating data from the top 15 online ad sellers. The IAB sponsors the Internet Advertising Revenue Report, which is conducted independently by PricewaterhouseCoopers.

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Click fraud costs us US$1billion – Google

SEARCH giant Google more detail of its research into click-fraud problems, saying there are industry-wide misconceptions about the extent of the problem.

Google says the click-fraud rates it has detected since launching AdWords service in 2002 has been typically single digits just under 10 per cent. The company says this rate is far less than estimates from some click-fraud audit companies.

Further, Google claims its automated detection systems, filters, online analysis and offline investigations picks up the vast majority of these invalid clicks.

For every percentage point of invalid clicks Google throws out, the company says it foregoes US$100 million/year in a potential revenue.

The company last week outlined details of its real-time filtering systems and offline analysis systems for detecting click-fraud. Google likens click-fraud to spam email.

“The most significant similarity is that the seriousness of the problem is not measured by how much spam is sent, but rather how much gets into a user’s inbox,” Google said via its corporate web site.

“When looking at click fraud, the most important measure is not the ‘activity’ metric – which measures the volume of invalid clicks that occur overall – but the ‘impact’ metric,” Google said.

Google says there is a vast difference between “invalid clicks” and “click fraud”, and that the difference is based on intent. For example, the second click of all double-clicks are automatically filtered out by the company.

“We mark this kind of activity (double-clicks) as invalid simply to optimise advertiser ROI. Those clicks are included in our “activity” metric and are also a good reason we use the term “invalid” clicks instead of fraud,” the company says.

Google estimates the relatively rare cases of advertisers being affected by click-fraud undetected by its automated filtering and analysis to be not more than 0.02 per cent of clicks – or two in ten thousand.

The company is working with Interactive Advertising Bureau members on a set of standards and guidelines for click measurement.

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