According to a press release today by The Interactive Advertising Bureau (IAB), they and PricewaterhouseCoopers (PwC) performed a joint study and found that Internet advertising revenues for 2005 are estimated to exceed $12.5 billion.

… a 30% increase over the previous revenue record of $9.6 billion in 2004. The 2005 Q4 revenues totaled a record $3.6 billion; making it the second consecutive quarter to surpass the $3 billion mark and the highest quarter reported. Fourth quarter revenues represent a 35 percent increase over the same period in 2004 and a 17 percent increase over Q3 of 2005.

I wonder what the split is between search based advertising and banner advertising — perhaps the IAB can tell us when their report is made available in April.

In a recent report by Piper Jaffray analyst Safa Rashtchy, reported in Clickz , the tipping point for offline ad dollars moving to online will be in 2006.

“We believe online media now receives about 5 percent of total marketing spending, up from 3 percent two years ago. However, online is on its way to a 10 percent share much faster then we anticipated, and we believe we are now approaching an inflection point when spending growth could accelerate,” Rashtchy wrote in a newly-released report. “This point is likely to be in the second half of 2006, as the full impact of some of the recent allocation increases from major marketers becomes evident and creates a momentum that will attract more spending by advertisers who are on the sidelines now.”

The big winners of all this online ad spending are predicted to be Google and Yahoo. Additional spending will be on smaller vertical sites.

As more and more people are turning to the internet to get their news, shop and answer their basic questions, good online ads can help readers, consumers and researchers find what the items they are seeking. In my opinion this can only be good, and will allow internet sites to be more innovative as they see an increase in revenues.