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Show of confidence brings 14% increase

Julian Lee
May 11, 2009

ONLINE advertising was one of the few bright spots in an otherwise gloomy $12 billion media advertising market, with a 14 per cent rise for the first quarter of the year.

Advertisers tipped an extra $55 million into the $1.4 billon online ad market in the three months to March 31 compared with the same period last year, figures from PricewaterhouseCoopers show. The total for the quarter was $439 million.

"We weren't surprised by the result," said Fairfax Digital's commercial director, Ed Harrison.

"It shows that advertisers still have confidence in online. It's good to be in a space that's still growing."

Expenditure for the display category such as banner ads and spots before videos - which account for a quarter of the market - grew 16 per cent on the same period last year. A decline in job ads and a slower automotive and real estate market held back the online classifieds market, which fell by 1 per cent.

But ads placed in search engines such as Google and in online directories such as Sensis - which account for 51 per cent of the medium - outstripped the market, growing 23 per cent. Search engines outperformed directories, PWC said.

The market fell from a high in 2008's last quarter - typically the busiest period of the year, in the lead-up to Christmas - down almost 5 per cent or $22 million in value.

Paul Fisher, chief executive of the Interactive Advertising Bureau, which commissions the report, said he expected the growth rate to rise with a return of business confidence and for the market to land at "somewhere in the high teens" by the end of the year.

"I've always said I was hoping for 17 per cent growth, and that's purely self-serving as it will put us through the $2 billion barrier, which would be great for the industry. I was hoping for a higher figure [in the quarter] but it's still a good result."

Mr Harrison said demand for ads placed before videos on its websites was fuelling the display category.

News Digital Media, the digital arm of News Limited, said there was still "a lot of activity" by advertisers looking to acquire customers for credit cards. Its chief operating officer, Ed Smith, was less bullish. "I think it will come back a little bit in the next quarter."

Pay TV and online are the only media expected to grow in a market that analysts predict will contract by at least 4.5 per cent.

From the Sydney Morning Herald.

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