Online advertising chases $300m

Online advertising chases $300m, by Paul McIntre - 20th May 2004
(Credit: The Sydney Morning Herald)

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The online advertising market could break through the $300 million threshold this year, with key players saying savvy advertisers are continuing to fuel increases of more than 50 per cent this year.

According to the heads of ninemsn and f2, which have finalised deals in the past week with the Yahoo!-owned Overture for paid search listings, online advertising demand is matching last year's growth.

The Audit Bureau of Circulations says online revenues increased from $140 million in 2002 to $236 million last year. Online advertising covers classifieds, display advertisements such as banners and sponsorships, and search and directories.

The figure of $300 million was "very likely", said ninemsn's chief executive, Martin Hoffman, who announced last week the company had dumped LookSmart in favour of Overture for the delivery of "paid search" advertisements across ninemsn's online properties. "We're in the middle of the advertising cycle and we're seeing strong growth across the board."

Nick Leeder, f2's chief operating officer, said classified and paid search advertising was growing at about 60 per cent this year, with display ads up about 30 per cent. "[The market] will probably make it to $300 million this year - if not in 2004, certainly within 18 months," he said. "As a network we certainly know traffic goes up 40 per cent per annum. Every year I think 'this will be the year it will stop', and every year I'm wrong. You're just getting more people with broadband and we're making site services better."

Mr Hoffman of ninemsn said paid search would be "the big story over the next 12 to 18 months".

Overture's managing director, Mel Bohse, said the paid search market was worth an estimated $35 million. About 60 per cent of Overture's revenues came from blue-chip companies and 40 per cent from small and medium- sized enterprises. "For us, the growth will definitely come from the SME market - because it doesn't require creative, it's not at the high end. Our entry point is very low. There's a minimum of 10c to get into a placement."


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