THE online advertising market surged to $620 million last year as advertisers continued to flock to a medium that some analysts predict will be worth $1 billion by the end of the year.
Advertisers spent 60 per cent more on banner ads, classifieds and sponsored links online in the year to December 31, 2005, than in 2004, according to the latest revenue figures supplied to the Audit Bureau of Verification Services.
If growth continues at this pace, online is set to overtake established media such as radio and even magazines in the $10.3 billion advertising market.
Martin Hoffman, the chief executive of ninemsn, the joint venture between Microsoft and Publishing & Broadcasting Ltd, said: "This is the third year in a row and all the signs are there that we can expect similar levels of growth in calendar 2006."
He said there was "still a big opportunity to close the gap" between the amount of time people devoted to media - online makes up 15 per cent, according to research company Roy Morgan - and the amount advertisers spent online, about 6 per cent of the $10.3 billion total.
Liam Walsh, national sales director of Fairfax Digital, was more conservative, predicting growth in the coming year would still be "buoyant" but more in the order of 50 per cent.
But he said he was confident online would overtake radio's share of the ad market, which media buyer Fusion Strategy says was worth $890 million in 2005 and which it predicts will grow to $940 million by the end of this year.
Fusion Strategy's Steve Allen was confident online would reach $1 billion by the end of the year and eclipse radio.
The increase in the adoption of broadband is cited as a catalyst for growth as people spend more time online and advertisers are able to deliver ads that rival television in quality and entertainment - what the industry calls "rich media".
The audit bureau's Online Advertising Expenditure Report 2005 says spending in the full year on general display advertising, such as banners, rose by 51 per cent to $194 million.
Spending on classifieds grew 56.1 per cent to $206 million, while spending on search and directories - where an ad appears in response to a query - grew 72.5 per cent to $220 million.
