The recent arrival of a number of US-based Internet advertising networks in Asia has the local community again buzzing about the dollars to be made from Web advertising. Even before last week's glitzy launch of DoubleClick Asia, a joint venture between Hong Kong Web-portal builder Asiacontent.com and New York-based Net advertising leader, Doubleclick, other companies had announced their presence. Internet advertising network Space Asia claims a client list of 80 Web sites in the region while 24/7 Media, a joint-venture Web-advertising network with China. com, says it has 140 Web sites. And there is Adforce Asia, a partnership with Web-portal Sina.com that provides the technology to manage on-line ad networks. Flycast, another US-based ad network owned by CMGI, is reportedly coming to Asia via CMGI's connection to Pacific Century Group. All of these companies hope to jump-start Internet advertising sales in Asia, which some said could be a US$1.5 billion business by 2001, by helping clients identify potential customers. How? By incorporating powerful direct-marketing techniques through use of interactive technology. For instance, with special software, an on-line advertising company can track Internet users' movements by collecting 'cookies', which are small files embedded in users' Web browsers which log the types of pages they visit and for how long. By looking at the digital trace a user leaves, Web advertising firms can paint a fairly-informed picture of a user's interests and potential buying patterns. Any Web site, even without special software, can track what pages visitors look at when they are on the site. Or it can require that users disclose information beforehand. An advertising network like DoubleClick, for instance, can track what Web surfers are doing at any of the 490 member sites in its global network. That lets it serve up in real time the most-relevant advertisement. 'This is the most accurate, most targeted medium available,' said Space Asia's managing director, Colin McIntosh. The benefits are not only for potential advertisers. For Web portal operators, joining an Internet advertising network can increase their visibility to advertisers and increase sales overall, despite the typical cut of 30 per cent or more networks charge. Advertising networks believe the ability to better target their global audience justifies higher ad rates. 'On-line ad revenues might be small relative to off-line advertising revenues . . . but it's growing very fast year on year and by 2003, if it has just 5 per cent of the off-line market, that's big already,' said 24/7's Asian managing director Patrick Wong. All say a massive pot of gold, big enough for everyone, is waiting at the end of the rainbow some time in 2003. 'It's small now but it's going to get big. There's no doubt about it,' said Kevin O'Connor, chief executive of Doubleclick. 'Asia is two to three years behind the US, and I'm seeing the same scepticism [as there was] three years ago in the US. But look at the [US] market today.' On-line advertising spending in the US for the first quarter this year was $693 million, nearly double the $351 million a year earlier, according to the US-based Internet Advertising Bureau. Forrester Research said that by the end of this year, on-line ad spending - about 90 per cent to US-based sites - would be $2.8 billion. While no hard figures are available, Asian Net advertising revenues no doubt still pale in comparison. Agencies said they spent most of last year simply educating clients as to the medium's potential. But Goldman Sachs Internet analyst Rajeev Gupta in July bullishly forecast Asian on-line ad spending would reach $1.5 billion by 2001, or about 5 per cent of the region's advertising market, which compares with just $10 million from the overall off-line ad-spend of $21.4 billion last year. Based on that 5 per cent, Hong Kong's on-line advertising market would be worth $152 million in 2001, said Andrew Watkins, partner at PricewaterhouseCoopers. 'Off-line media such as radio, television and print might have broader reach right now, but the ads aren't interactive and they cannot be as targeted as on-line advertising,' said Alice Lin, director of international business at Adforce Asia. Others are not so sure. 'It's insane out there,' Joe Sweeney, Internet research director at Gartner Group, said. 'Just take a look at Goldman Sach's statement that by 2002 there will be two million active Net users in Hong Kong . . . that's one in three people - men, women, children, babies, grandmas, street-sleepers - who will use the Net.' The slow growth in PC access is another reason. 'Off-line advertising will continue to dominate because most of Asia is off-line. However, the cannibalisation will happen and it'll probably start with 20 per cent of radio advertising going on-line because it's a richer media,' said Hanson Cheah of AsiaTech Ventures. Net advertising networks say traditional ad agencies and their conservative mindset are a big hurdle. 'Most of them don't understand what on-line ads can do because it requires them to be more tech-savvy and ad people are mostly creative types,' 24/7's Mr Wong said. Off-line agencies said Web banner ads still provided less than satisfactory results. 'I do not remember banner ads,' Gerard Lim, regional account director at Leo Burnett in Singapore, said. 'They have almost zero impact, recall and retentive value.' 'Perhaps when everyone is on a higher bandwidth to receive video and sound, hence allowing us to target rich media ads on-line, we'll start recommending the medium to our clients,' he said.
