U.S. online ad revenue up 26 pct in first quarter

NEW YORK (Reuters) - U.S. online advertising revenue grew 26 percent year on year to a record $4.9 billion in the first quarter of 2007, according to the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC).

The online advertising sector has seen strong growth in recent years as marketers put more money into online, and away from traditional areas such as newspapers and television.

"The continued growth of online ad revenues clearly illustrates marketers' increased comfort with the extraordinary vitality and accountability of this medium," IAB President and CEO Randall Rothenberg said in a statement.

The sector has been bolstered in recent months by merger and acquisition activity involving some of online advertising's biggest names.

Last month Microsoft Corp. agreed to buy aQuantive Inc., an online advertising business for $6 billion, while advertising group WPP Group Plc. said it would pay $649 million for 24/7 Real Media Inc..

In April, Google Inc., said it would pay $3.1 billion for Doubleclick Inc., which offers a digital marketplace that connects ad agencies, marketers and Web site publishers.

Investors are betting on increased growth in the online ad sector as broadband penetration grows and more services move to the Web.

"We may expect continued strong revenue growth buoyed by an expanding broadband subscriber base," said Peter Petrusky, director at PwC. "(This) could translate into more users spending more time online and offers a platform for rich media and video ads that dial-up connections can't render."