Online advertising on the way up

The three-year hiatus in online advertising finally looks set to end, according to accountancy firm PricewaterhouseCoopers (PwC).

A report into internet advertising, PwC's Entertainment and Media Outlook: 2003-2007 Europe, published this week forecasts a 3.4% Compound Annual Growth Rate (CAGR) and indicates that advertising revenue over the period to 2007 is expected to increase across the six key territories in Europe - UK, France, Germany, Italy, Spain and the Netherlands - to euro 243 billion.

This is up from the euro 205 billion spent in 2002, an increase of 2.8% from 2001.

As defined in this report, Entertainment and Media (E&M) spending, consists of expenditure by both advertisers and end-users across the full range of E&M services, products and platforms.

Robert Boyle, European Leader, Entertainment & Media practice, PricewaterhouseCoopers commented: "The clear picture is of an industry continuing to make strong progress amid challenging economic, regulatory and geopolitical conditions, whilst demonstrating the cyclical resilience of some mature sectors.

"Consumer adoption of new next-generation technologies will offset the impact of ageing platforms in Internet and TV. The music industry, so heavily impacted by piracy and the illegal download of content will begin to fight back by 2007 as suppliers develop legitimate download channels and cut prices to consumers.

"Advertising, so badly hit by the global events of the past few years will benefit from the major sporting events scheduled during the period under review. The Football World Cup in Germany in 2006 is also likely to increase gate revenues and the TV rights for both this event and the Olympics in Athens will contribute to boosted revenues."

The report also expects growth of broadband will increasingly affect the piracy of filmed entertainment but to a lesser extent than the Internet has affected the recorded music industry.

Internet Access and Advertising Spend is expected to continue to grow quickly, with a 7.4% compound annual increase to 2007. Most of the six countries will more than treble the number of broadband subscribers during this period.

Although still a relatively small overall market, the level of online advertising is expected to recover strongly with double-digit growth levels to 2007.

(SP)