1.6.07

Search fuels online ad splurge - Australian IT - May 31 2007


GALLOPING internet advertising growth continued almost unabated in the three months to March when revenues jumped 51 per cent to $294 million due to a continuing strong swing to paid search marketing.

Key advertising players predicted the growth, which was above most predictions, would continue for the foreseeable future, accompanied by a push for search revenue across the sector.

Almost one in two online advertising dollars, or 47 per cent, is spent on search and directories advertising. Key contributors include search behemoth Google and Sensis's Yellow Pages site.

ZenithOptimedia managing partner Matt Houltham said a renewed focus from advertisers on measuring the sales return on their internet advertising was fuelling the growth in search.

"I think it's a surprisingly buoyant number," Mr Houltham said. "I would have expected total growth to come in at about 40 per cent."

The report, the first from PricewaterhouseCoopers after it took over the contract from the Audit Bureau of Verification Services, showed search and directories grew 85 per cent compared with the same period last year, to $140 million.

Total first-quarter revenues were up $99million compared with the same quarter last year, but slid 7 per cent, or $23million, compared with the three months to December in line with seasonal trends.

Across the industry, total growth of 51per cent out-gunned most estimates from bigger publishers and media buyers, who were expecting year-on-year growth of 30 per cent to 40 per cent. Research firm Frost & Sullivan predicted growth would halve this year to 30 per cent.

Only Fusion Strategy's Steve Allen predicted growth above 50 per cent.

Classified advertising was the second biggest sector in the quarter, contributing 27 per cent of revenues, or $80million, while general advertising comprised 26 per cent, worth $75million. Those sectors grew by 28 per cent and 30 per cent respectively compared with the same period last year.

Sensis digital marketing services chief Anthony Saines said the company, which recently made a pitch to media buyers for $1 billion in online advertising revenues, had strong growth across the market and expected it to continue throughout the year.

"I'm optimistic that we're out-pacing the market," Mr Saines said. "We had a good quarter and we've seen this robustness follow through into the June quarter."

He said annual growth, which topped 60 per cent last year, could exceed 50per cent throughout 2007.

Kate Vale, head of sales and operations for Google Australasia, said publishers, advertisers and media agencies were all joining the rush to search engine marketing. Two weeks ago, Google clinched a deal that will see it place paid contextual links on Fairfax sites, with revenue to be shared between the two companies.

Ninemsn and News Digital Media (a subsidiary of News Limited, publisher of The Australian) are also improving their offerings in the local search and directories advertising with MyLocal and True Local, respectively.

This week, News announced it had poached former Ninemsn director of marketing and strategy Louise Brockbank to be general manager of sales and marketing for Truelocal.com.au.

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