The online advertising market was given a much needed confidence boost yesterday when America Online (AOL) announced the acquisition of internet marketing firm, Advertising.com.
The online advertising market had recently been written off after it collapsed following the dotcom frenzy in 2000 and many asked whether the advertising model was viable.
Advertising.com, which was founded six years ago, buys advertising space from websites and search engines and then packages it up for clients then sells to advertisers who pay according to volume of responses or leads. Last year the company made an operating profit of £12 million due to revenues being up 80% to $132 million.
A report from PriceWaterhouseCoopers and the Interactive Advertising Bureau shows that US spending in this sector grew at six time the rate of the overall US advertising economy during quarter one of this year, backing up reports that marketing managers are and will continue to direct more of their budgets to online advertising.
In 2003, internet advertising reached $10 billion globally and recent forecasts from TNS Media Intelligence/CMR shows that the internet will emerge as the fastest growing advertising medium this year rising by 15.8% (see US Advertising To Grow By 9.3% This Year).
AOL, chief executive, Jonathan Miller said: “Online advertising is back. Over the past two years we have seen a rebirth of online advertising. Major advertisers are coming more and more to the web and spending more and more on their marketing money online.”
In the first quarter of this year, AOL recorded advertising revenues of £214 million, down 5% on the same period last year but was the second consecutive quarter of growth for the online giants.
This deal adds a third revenue stream to AOL’s advertising operation. It already has revenues from conventional brand advertising, as well as the Google search related advertising deal.
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