SA online ad industry blooming

Johannesburg - Online advertising revenue in SA is set to treble from the current R60m-mark in the next three years, a new study on online media in SA has shown.

Research group World Wide Worx expects online advertising revenue in South Africa to reach R183m this year, and pass the R200m-mark in 2007.

The study - "Online Media in South Africa 2005" - which was conducted with the cooperation of the Online Publishers Association (OPA) reveals an industry that is quickly shaking off the slump of the early 2000s.

The OPA represents the country's 25 major online publishers.

According to World Wide Worx it took the online publishing industry nine years, from 1994 to 2003, to grow to the R60m revenue mark, yet it is set to treble that amount in the subsequent three years.

"It's looking very positive for online advertising ? a medium that has finally come of age," said Arthur Goldstuck, MD of World Wide Worx.

"But this phenomenal growth masks the fact that the numbers would be far higher if the advertising industry woke up to the potential of the medium."

Clean profits

The study found that lack of awareness within the traditional advertising industry of the efficiency, measurability and reach of online advertising has held back the growth of the medium.

By the same token, it underlined the potential of the medium should advertisers and agencies become better educated about online advertising.

Shirley Singer of Insightss Research, which collaborated with World Wide Worx on the research project, noted that 2004 was the first breakeven year for the industry, after an overall loss of R18m for 2003.

"The industry only moved into clear profitability in 2006," said Singer.

"The conclusion is that companies need to invest time, money and patience in developing their online presence."

As in South Africa, the growth of online advertising revenue in the world's largest media market, the United States, resumed an upward path in 2003 after falling dramatically in 2000.

Tracking global trends

"Ironically, online advertising is one arena of online activity in which South Africa has seen more substantial percentage growth than the US over the past four years, and where the growth rate for 2006 is similar to that in the US," said Goldstuck.

OPA chairperson Russell Hanly agreed: "The online advertising industry in South Africa is growing rapidly and can now claim itself to be tracking global growth trends.

"We believe that online advertising is now a strong creative platform that offers real connections with consumers whilst being highly measurable and data driven."

One of the most dramatic findings in terms of type of advertising is the decline in importance of the conventional banner ad, from close to two thirds of all online revenue in 2003 to less than half in 2005. This trend is likely to continue in 2006.

Rich media banners - ads that allow web users to interact with them - have increased by a significant proportion, from 7% in 2003 to 15% in 2005, while sponsorship and subscription content have maintained a consistent proportion, around 7% to 10% each, of online revenue for the past three years.

"This study proves that online advertising has really found its feet; but it also shows that the industry needs to push hard to achieve its potential and educate advertisers on new internet technology and usage trends," said Hanly.

This article first appear on fin24.com