Internet advertising revenues in the US have hit new highs, reaching $7.88 billion in Q3 2011, representing 22% growth from Q3 2010 and a 2.7% increase from the previous peak in Q2 2011,according to November 2011 figures from the Interactive Advertising Bureau (IAB).

Looking at long-term historical performance since 1996, Q3 internet ad revenues have risen year-over-year in all but three years: 2009, 2002, and 2001. Revenues experienced a decline and temporary plateau in 2009, when Q2 revenue was $5.4 billion, but began to rebound later that year, demonstrating healthy growth aside from slight seasonal dips in Q1 2010 and Q1 2011. Online advertising’s impressive growth is seen more starkly when comparing Q3 figures this year to a decade ago: in Q3 2001, revenue stood at just $1.8 billion, or about $2.3 billion in constant dollars.

According to December 2011 data from Zenith Optimedia, internet advertising will increase its share of the global ad market from 15.9% in 2011 to 21.2% in 2014.

The leading advertising categories [pdf] by H1 2011 share are: search (49%); display related (37%) - including banner ads (23%), digital video (6%), rich media (5%), and sponsorship (3%); classifieds (8%); referrals/lead generation (5%); and email (1%).

Meanwhile, in H1, performance continued to be the leading revenue pricing basis, followed by cost per medium/thousand (CPM) or impressions, with hybrid the least popular.

Top Category Leaders

Google is the dominant leader in the search market, garnering 83% of US spend share and 82% of US click share, while controlling 65.5% of overall US search volumes, according to[download page] a July 2011 report from Marin Software. eMarketer data indicates that Google’s search revenues reached $8.83 billion in the US in 2010, representing a 71.4% share of the $12.37 billion market. Yahoo (10.4%), Microsoft (10.2%), and AOL (2.3%) followed, meaning that the top 4 web properties controlled 94.3% of all search advertising revenue in 2010. This year, eMarketer projects search revenue to grow almost 10% and hit $13.59 billion.

Facebook will bypass Yahoo in US display revenues in 2011 to become the largest seller of display ads, with Google remaining in the #3 spot, according to June 2011 analysis from eMarketer, which estimates Facebook’s share of US online display ad revenues to grow to 17.7%, up from 12.2% in 2010. Together, the top 5 ad-selling companies are projected to control almost half of the $12.33 billion display ad market this year, up from 45.1% in 2010 and 38.3% in 2009.

Yahoo, which boasted the highest display revenue of all web properties in 2009 and 2010, has experienced a small but steady decline, as has AOL, which has remained in the fifth spot. By contrast, Facebook and Google have both more than doubled their market share since 2009.

Top Online Advertising Industries

Retail (23%), telecom (14%), financial services (13%), auto (11%), and computing products (10%) were the top 5 industry categories by internet ad revenues in H1 2011, all maintaining their positions from H1 2010, according to IAB data (see link above).

Top 10 Global Internet Ad Markets

The US, by virtue of its sheer size, is the largest online advertising market in 2011, with $154.9 billion in total ad spend, according to Zenith Optimedia (see link above). The next largest market is Japan ($45.4 billion), followed by China ($29.9 billion), Germany ($24.82 billion), and the UK ($18.4 billion). Brazil, France, Australia, Canada, and Italy round out the top 10.

The report used 2010 average rates for its currency conversions.