As the internet and its audience mature, the online advertising industry, for so long a victim of the Web's growing pains, is beginning to mature with them, fuelled by real revenues.
Kevin Huang, chief executive of local internet advertising company Pixel Media, said: 'What we are seeing is slow and steady growth, fuelled by traditional advertisers who are starting to shift their advertising dollars on to the internet.'
Slow and steady growth compares well with the situation a few years ago, when at the height of the dotcom boom a wealth of websites sprang up hoping to cash in on the internet's potential as an advertising medium. Many were fuelled by inflated estimates of the size of the online marketing pie but, in reality, much of the advertising that appeared was as a result of barter deals, where sites would run banner ads for each other without any money changing hands.
This was made worse by the fact that many of the smaller sites were dependent on a handful of larger ones. 'The big dotcoms made up 70 per cent to 80 per cent of the revenue for smaller ones,' said Mr Huang. So when some of the larger sites folded, they took many smaller ones with them.
But, today, with advertisers more familiar with the medium, revenues are rising. A study published last week at Microsoft's annual MSN Strategic Account Summit, found online advertising had driven lifts in consumer product sales ranging from 7 per cent to 12.5 per cent. Microsoft also claimed that online advertising was beginning to sharply outperform ads in traditional media.
Online advertising revenue in Asia is forecast to grow at a compound annual growth rate of 39.8 per cent from US$304.3 million in 2002 to $1.62 billion in 2007, according to a report issued late last year by technology analysts International Data Corp.
Much of the growth is fuelled by search-engine listings, where companies pay to have their websites appear among the first listings when a particular term is entered into a search engine such as Google.