Internet Market Catches A Summer Sniffle

Sydney Morning Herald

Thursday February 23, 2006

Paul McIntyre Marketing Editor

PROPERTY developers, banks, technology and telecoms are underpinning the booming online advertising market, according to the latest tracking figures, although last month scared some online publishers when the internet ad market took a dive.

While audited figures released this week for 2005 show internet advertising rocketed 60 per cent to $620 million, some industry players said the drop in ad revenues in January was an early warning that the internet advertising market was maturing and subject to seasonal market fluctuations.

"I have seen some seasonal behaviour I've never seen before," said News Interactive chief executive Nic Jones. "January was a bit slower for the first time."

According to figures from Nielsen NetRatings for January, the number of internet advertising campaigns fell 10 per cent to 1266 and the number of advertisers active in January dropped 16 per cent to 631.

Other publishers including ninemsn and Sensis also saw the online ad market fall off in December and January although ninemsn chief executive Martin Hoffman denied the market was behaving any differently to previous years.

"I don't know where Nic [Jones] has been for the last few years," he said. "There's always been a decline in the December-January period consistent with general economic and advertising activity. January is typically the smallest month of the year. It's still very much up on prior years but lower than previous months."

However, Fairfax Digital and one of the country's biggest online media buyers, emitch, said they had no evidence of an ad slowdown over the summer break.

"January was spectacular for us," said Fairfax Digital national sales director Liam Walsh. "January is the worst month for online but our January was up 220 per cent. I think all of them [online publishers] had a bad January except us but I believe February has bounced back."

Lee Stephens, chief executive of emitch, which announces its financial results today, said he also had no evidence of an ad downturn in January. "I'm not seeing any seasonality at all. As a matter of fact, January was one of our largest months on record. I was surprised at the level of continued growth."

Mr Stephens said those online publishers suffering over summer might have a "portfolio problem" in that they were too reliant on advertising clients who pulled back spending over the holiday period.

Nielsen NetRatings managing director Andrew Reid said there was "definitely a decline" in the number of banner ads in the market but advertisers were being "more selective" in their media buying. The trend, he said, was for advertisers to launch a lower number of online ad campaigns but to produce more banner ads within those campaigns.

Mr Stephens said the average advertising click-through rate for online campaigns had "stabilised" at between 0.2-0.5 per cent in the past 12 months. Five years ago it was 1-2 per cent.

© 2006 Sydney Morning Herald

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