Performance-based ads growing faster than CPM ads

Cory Bergman October 4th, 2007

Online ad spending is still growing at a torrid pace, although the rate of growth is beginning to slow. For Q2 of this year, online ad spending hit $5.1 billion, up 25.4 percent over the same time last year, according to IAB. Here’s the nugget: “Perhaps surprisingly, this year’s record growth has been driven largely by performance based advertising, despite all of the discussion surrounding the flood of brand dollars headed to the web,” writes MediaWeek’s Mike Shields. Performance-based deals hit the 50 percent mark, compared to 45 percent for CPM-based deals. Of course, search is the big driver there, but lead-generation is growing as well. (This should be a continued concern for media sites that only sell on CPMs and sponsorships.) Also, the big 10 sites (Google, Yahoo, AOL, etc.) hauled in 70 percent of ad dollars in Q1-Q2 of this year. As we’ve written before, scale matters.