Online ad industry cheers up

Ahmedabad: The global online advertising industry appears to be breaking the shackles at last.

If the figures released by Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC) are any indication, the revenues generated by this industry are on an upward swing.

Worldwide, the industry has recorded a quarterly increase in revenues for the second successive year. According to another study, Internet advertising revenues have gone up by 7 per cent to $1.7 billion in the first three months of 2003 as compared to the last quarter of 2002. The concomitant increase in revenues is 11 per cent.

The success of the search engine advertising model that accounted for 15 per cent of the online ad revenues in 2002 has been a major contributor towards the overall growth in revenues.

According to PwC, paid search will account for 20 to 25 per cent of the total online advertising sales. Growing adoption of broadband Internet in the home segment is also expected to boost online ad revenues.

Tom Hyland, head of PricewaterhouseCooper's new media group, has reportedly said the early results show that the future for interactive advertising appears to be on a strong footing and is poised for gradual and sustained growth. "Many of the factors contributing to the last quarter's up-tick seem to have held momentum, including improved data for advertisers to analyse as they have now been engaged in the market for a longer period of time."

Obviously, Internet advertising has gained significant momentum across the world and has become a part of the media mix that is being considered by advertisers. Research predicts that worldwide, $33 billion will be spent on online advertising by 2004. The Asia/Pacific region will spend $3.3 billion, representing 5.9 per cent of the region's advertising budget for that year.

According to studies conducted on the penetration of the Internet, it took the Internet under five years to attract a critical mass of 25 per cent of US households, compared to seven years for TV, eight years for radio and 28 years for cable.

As for the global entertainment and media industry spending, it has been estimated that it will surpass $1.1 trillion by the end of this year, up 3.7 per cent from its 2002 level, says PwC. Global entertainment and media spending is expected to touch $1.4 trillion in 2007, for a 4.8 per cent compound annual growth rate over the next five years.

Significantly, PwC forecasts that by 2003-end, Asia-Pacific will have surpassed the US as the world's largest broadband market and by 2007, there will be 50-million broadband households there. Globally speaking, new products and services generated by digital technology and broadband will drive market growth. Sums up PwC: "In the near term, digitisation will cannibalise existing revenues."