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Online ads disrupting advertisement business (22 August)
According to a recent survey led by the Internet research firm Frost & Sullivan, Internet advertising grew by 59.4 per cent in 2006 and surpasses the all other forms of advertising for growth this year. Indeed, Internet advertising will overtake the $978 million magazine advertising industry by December. The growth of the Internet (up 46.4 per cent) far outpaced all other media such as TV, newspapers, magazines, radio, and billboards. 
General display advertising on the Internet, including banner and video advertising, was the fastest-growing sector. Sites such as Ninemsn, yahoo7, Fairfax Digital and News Interactive are now more and more focused on video advertising.
This success also led to a pricing rise. For instance, the cost of premium inventory rose 6.6 per cent, run of network inventory increased 3.6 per cent, and paid search by 1.3 per cent.
Online ad spending will continue to climb for the next five years and online marketing and advertising will represent eight per cent of total advertising spending by 2010, forecast market research firm Forrester Research. Following that trend, by the end of the decade, web advertising will rival ad spending on cable/satellite TV and radio and more than half of marketers surveyed by Forrester said they planned to decrease spending in traditional advertising channels like magazines, direct mail, and newspapers to fund an increase in online ad spending.
Such a trend can be explained by what marketers call "disillusionment" with traditional media. On one hand, the public is being increasingly aware of marketing strategies and ad busting is becoming more and more popular. As a consequence, advertisers have to find alternatives to mainstream media for their communication campaigns.
On the other hand Internet is currently wide-spread and online display advertising is likely to continue to grow strongly as more homes take up broadband access.
Finance, communications and computers, automotive and travel actually continue to dominate online advertising, but entertainment and leisure are also showing a deep interest to online ads. In a way, more and more business field are attracted to ads online and it conveys the idea they are cutting down their budget to other kinds of media advertisement.
What is also striking is that spending on local online advertising is continuously growing. Internet is now seen as more than a global medium. As local newspaper and radio, it is now being used as a local advertising tool. Likewise, local advertisers who have in the past used direct mail and yellow pages are now moving online.
Despite the fact that marketers spend only four per cent of ad budgets online versus 25 per cent on TV, spending consequences are similar in TV market. As more and more money is spent on Internet ads, TV spend shrank by 0.08 per cent in the six months to June as said the Frost & Sullivan survey.
As a result, traditional media is increasingly publishing online. It provides the opportunity to reach a broader audience but it especially has an interest in providing more ad space to advertisers.
By Claire Leraudat

Further reading: News.com.com report; Click Z; Marketing Vox

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