Online ads weather economic storms

Consulting firm Frost & Sullivan analysed four digital advertising markets, including online classifieds, online search ads, general online ads, and mobile ads.

They found that revenue growth between the end of 2007 and the beginning of 2008 stalled dramatically to less than one percent, most likely because of economic problems worldwide.

"We thought it was surprising that digital ad growth had slowed in the first half of the year," said Darryl Nelson, Frost & Sullivan Senior Research Manager.

"It was fully understandable, though, because with the economy slowing in first half of the year, there was a lot of trimming of budgets, and digital media was affected as much as traditional media."

Nelson says that online advertising is expected to sustain so much growth because it's becoming a cheaper and more effective alternative to companies with limited budgets.

"As we've moved into the next financial year, and new marketing budgets have become available, more of the ads are moving into digital media," he said.

"Because many budgets have been trimmed, there's great incentive into digital because it's much cheaper to reach people online, and trends are showing that more and more people are moving online."

As a result, the study predicts online advertising revenue to grow to $481.4 million in 2008, while traditional site display advertising revenue has fallen five percent in the past year.

The market leader in online advertising still continues to be Ninemsn, who took 21 percent of the market share in the 2008 financial year.

The study forecasts continued growth and higher competition in the online advertising arena. The increasing competition could also point to significant upheavals across major media players, as they develop their direct marketing and brand strategies.

Nelson also believes the next big wave in the medium will come from direct marketing.

"There's been a strong shift into direct marketing, into things like next generation brand advertising, online video and integrated content," he said.

"There hasn't been much spend in that are to date, but now many big players are starting to move in that direction."