Ads soar on internet

ADVERTISING on the internet grew four times faster than the average across most main media last year.

Revenues of $388 million pushed the web ahead of billboard advertising for the first time.

Strong growth in general and classified advertising and a booming search and directories market saw online advertising rise 64 per cent last year, up from $236 million the previous year, Audit Bureau of Verification Services figures show.

Search and directories -- which includes advertising revenue from directories such as the Yellow Pages website and the sensis.com.au search engine Telstra launched last year -- had the fastest growth.

It rose 85 per cent to $127.5 million to grab 33 per cent of the market. General advertising grew 59 per cent to $128.5 million and classifieds rose 53 per cent to $132 million, 34 per cent of the total.

The figures reflected renewed confidence from advertisers in the medium after the 2000 dotcom crash, said Ninemsn chief executive Martin Hoffman, who added that online had benefited from fragmentation of other mass media audiences.

"If we get a cyclical downturn in advertising spend overall, it will be interesting to see how online fares. (We think) people will cut (online advertising budgets) last, not first."

Hoffman said the increased penetration of broadband connections was driving both internet usage and television-style rich media advertising.

Fierce competition in the search market between Ninemsn, Google, Yahoo and Sensis, which have all launched search initiatives in the past year, is also boosting search engine advertising.

Technology analyst firm Frost & Sullivan's research director Foad Fadaghi predicted the search advertising market, excluding directories, would grow from 20 per cent of all online advertising last year to 30 per cent by 2010: "Advertisers are now (advertising on) multiple search engines because they want greater reach."

He said online advertising should grow by an extra 50 per cent this year but Mr Fadaghi said growth in classified advertising could slow: "That industry is about to be subjected to bigger challenges as advertising-based (free listing) models such as Craigslist get some traction."

Fairfax Digital chief operating officer Mike Game said while free listings were a future threat, Fairfax expected growth in classifieds to top 30 per cent this year driven by the strength of the recruitment market.

Emitch chairman Stuart Simson predicted general advertising online, excluding classifieds and search, would grow from about 2 per cent of total advertising spending to about 4 per cent in the next few years.

Average growth across most main media was 14 per cent last year, Nielsen AdEx data shows.

Source: The Australian