Revenues "exceeded budget expectations" last year and grew by 23 percent to $2.23 billion, the IAB said in a release from Toronto.
Television ad revenues topped the race with revenues up by 9 percent to $3.4 billion, the Financial Post reported.
Daily newspaper advertising revenues were $2.1 billion last year.
The biggest growth for Internet advertising was seen in video ads, which precede presentations of video news or on such sites as Youtube. Growth in video ads was up 85 percent over 2009 to $37 million last year, the IAB said.
"Surpassing the $2 billion mark for online ad revenues and moving into second place in terms of overall ad spend in Canada is without a doubt a watershed moment for the digital community in Canada," said IAB President Paula Gignac.
The bureau said it forecast online advertising revenues this year will reach $2.6 billion.
Notable deaths of 2014 [PHOTOS]