Canadian online advertising tops $1 billion

Online Ad Revenue Surges Forward As Variety Of Factors Combine for Growth

TORONTO, April 30, 2007 - The Interactive Advertising Bureau of Canada (IAB) today announced that 2006 Canadian Online Advertising Revenues surged to an unprecedented $1.01 billion dollars for the year. The 2006 actuals represent a 26% increase over the $801 million originally estimated by the IAB for 2006; and an 80% increase over the 2005 actuals of $562 million.

Of the $1.01 billion, approximately $208 million or 21% of ad dollars were allocated to the French Canadian Online market, representing growth of 68% over the 2005 actuals of $124 million.

2006 Canadian Online Ad Revenue by Advertising Vehicle, was as follows:

• Display advertising (including banner CPM and direct response advertising, plus contests, sponsorship and microsites) - 36%;
• Search advertising - 35%;
• Classifieds/Directories - 27%; and,
• Email - 2%

In actual millions of dollars, 2006 vs. 2005 Canadian Online Ad Revenue by Advertising Vehicle, was as follows:

	2006	2005	Change
Display	$364M	$230M	58%
Search	$353M	$197M	79%
Classifieds	$273M	$124M	120%
Email	$20M	$11M	82%

2006 Canadian Online Ad Revenue by Advertiser Category was also tabulated, and was as follows:

• Automotive - 16%;
• Consumer Packaged Goods - 14%;
• Entertainment (Music, Film, TV) - 9%;
• Financial - 16%;
• Leisure (Travel, Hotel, Hospitality) - 14%;
• Retail - 16%; and,
• Other - 15%

What accounts for the 80% jump in 2006 vs. 2005 revenue figures? IAB Canada and Ernst & Young LLP (who tabulated results from the double-blind survey), cite a number of critical factors leading to the increase, including:

1. Substantial Revenue Growth Across All Publishers:

• Small and Medium publishers (who typically net between $500k to $5M/yr.) showed an average revenue growth of 85% vs. 2005;
• Large publishers (who typically net between $5M to $30M/yr.) showed an average revenue growth of 155% vs. 2005; and,
• Very Large publishers (who typically net between $30M to $100M/yr.) showed an average revenue growth of 62% vs. 2005.

2. Revenue Growth Within Online Ad Networks:

• 2006 saw substantial growth in revenue for both US and Canadian networks selling "Canadian eyeballs" aggregated across U.S. and Canadian sites.

3. More Integration, New Advertisers, New Advertising Choices and New Ad Formats:

• More integrated campaigns; more new, blue-chip advertisers entering the market for the first time; more advertising choices for Search; uptake of rich media; and, the addition of video pre-roll advertising to the selection of Online advertising tools, all helped drive the industry forward.

"Add to all of this, results from the 7 CMOST (cross-media optimization) research studies that the IAB has undertaken over the past 4 years, plus the fact that in the past two years alone, over 1,000 senior-level advertiser, agency and publisher representatives have taken the IAB's Intensive One-Day Course in Interactive Marketing and Online Advertising -- and you get a sort of 'perfect storm' that was able to move the Canadian Online advertising dial forward to such an extent," says Paula Gignac, President of IAB Canada.

And there's still more growth to come. IAB Canada's projected total for 2007 Online advertising in Canada, is estimated to be $1.337 billion -- a full 32% more than the 2006 actual of $1.01 billion. "It's interesting," says Gignac. "While it took us 13 years from when the first banner was served on the Internet, until now, to reach the billion dollar mark in Canada, it may only take us another two to three years to reach the second billion. Fascinating times indeed."

About the IAB Canada 2006-07 Canadian Internet Advertising Revenue Report:

The 2006 actual revenues and the 2007 estimated revenues were reached after a comprehensive survey of all major Online publishers in Canada. Revenue data was compiled and analyzed by Ernst & Young LLP.

For more information about the IAB Canada 2006-07 Canadian Internet Advertising Revenue Report visit iabcanada.com.