Online ad revenues soar, but that's no reason to cheer

December 19, 2012: 2:55 PM ET

Advertising money is still pouring into the Internet. But with ad rates low -- and falling -- that doesn't mean much for any particular Internet publisher.

FORTUNE -- Total revenues from online ads are still headed skyward, up 18% in the third quarter over the same period last year, according to the Internet Advertising Bureau's semiannual report.

This means little to any individual Internet publisher, however, given that online ad rates are still declining. This despite paidContent's declaration today that "the growing amount of dollars flowing into the digital space is likely to produce solutions soon." "Solutions," that is, to the problem that online advertising has yet to live up to its early promise.

It's certainly better to have total revenues heading up rather than down, but with those revenues divvied up among so many online properties, and with doubt about the relative effectiveness of online ads still lingering, publishers are still looking for solutions. Things are only worse for mobile ads. Users are flocking away from the desktop and toward mobile devices, but the money isn't -- rates for mobile ads are a fraction of what they are for traditional Internet ads.

MORE: Google's biggest ad problem: Fat fingers

The IAB reported that U.S. Internet ad revenues hit a record $9.26 billion in the third quarter this year. Such growth points to "the strong results that marketers are receiving from digital marketing," IAB CEO Randall Rothenberg said in a statement.

Perhaps, but those results aren't as strong as they are for television ads, or even for print, which is why rates for those media remain higher. Precision is hard to come by, and the cost of any particular ad buy depends on a host of factors. But for a rough idea: Forrester Research puts the average CPM (cost per thousand viewers of an advertisement) at $2.66 for an online banner ad. Nielsen puts the average CPM for a TV ad at $24.68.

Online revenue growth, though, is expected to continue for the foreseeable future. The ad firm ZenithOptimedia recently predicted that online ads will represent 59 percent of the industry wide revenue growth over the next three years and will approach a quarter of the market by 2015. Total ad spending, it said, will rise by about 15% in that time.

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