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You are here: Home / NEWS & POLITICS / Advertisers Look Online as Budgets Tighten

Advertisers Look Online as Budgets Tighten

22 January 2009 by Australian Women Online

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According to a leading market research company, a growing number of large brand advertisers are embracing online advertising for its ability to achieve precise targeting, measurable ROI over traditional advertising, and above all, because it is a cost-effective medium amidst shrinking marketing budgets.

The Internet has become a mainstream source for the supply and search of ‘infotainment’ content; its biggest enthusiast are youths, and advertisers and media agencies alike are cashing-in.

Frost & Sullivan industry analyst Kamlesh Kalwar says youths in Singapore are hooked on the Internet. “They form the largest chunk of active Internet users and have been one of the primary drivers of online advertising in recent years.”

In 2008, Singapore’s online advertising industry was estimated to have raked-in US$190 million in revenues,
representing a year-on-year growth of 33.7 percent. Paid search advertising, by far the largest online advertising segment, accounted for 44 percent of Singapore’s online advertising revenues in 2007. This segment is expected to continue growing at a CAGR of 22.1 percent between 2008 and 2013.

Kalwar says, “Companies have not only started to see the value of online campaigns, but also recognise the
importance of tracking the campaigns. This is driving the growth of paid search.”

“Keeping pace with this fast-growing segment, the number of search engine marketing advertisement networks and agencies has also risen exponentially, leading to more innovative search and targeting options for advertisers,” he adds.

Display advertising was the second biggest segment accounting for 25 percent of revenues, with banner ads and email marketing being the two most popular forms of display ads.

Online classifieds accounted for 19 percent of the total revenues in 2007. Driven largely by the rapid audience shift, particularly youths, from print to online channels, this segment is forecasted to grow at a CAGR of 17.5 percent from 2008 to 2013. Job classifieds have been the main source of revenue for online classifieds in the past two years.

The other key revenue earners are online auctions, real estate and automotive or car sites.

The smallest segment, online directory services, which accounted for the remaining 12 percent of revenues in 2007, is expected to grow only marginally at a CAGR of 7.6 percent (2008-2013).

According to Kalwar, “Most online directories are of a display nature and do not seem to generate any significant amount of traffic. Many also lack a business model to significantly penetrate into niche directories, hence are not seen as attractive options for advertisers.”

“As users spend increasingly more time online, a growing number of companies are launching commercials online to grab their attention,” Kalwar adds.

Fraud, however, is a major challenge for the industry notes Kalwar, “Online businesses have generally been plagued with problems such as advance fee fraud, click fraud, credit card fraud, FOREX scam, employment scam, phishing and wire fraud, amongst many others.

“The rampant rise of online fraud has shaken the confidence of many buyers and sellers in the online marketplace,” he said.

“It is important for the online industry to make a united effort in curbing online fraud to increase advertiser
confidence in the online media.”

SOURCE: Frost & Sullivan (www.frost.com)

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