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Internet Growth in Internet ads outpaces all others

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Has quadrupled since 2001, report states GRANT ROBERTSON MEDIA REPORTER Internet advertising is the fastest-growing segment of the Canadian ad industry and, for the first time, Web-based commercials are raking in more dollars than billboards.
The out-of-home advertising category, which includes everything from billboards and bus-stop signs to video screens in food courts and elevators, was surpassed last year by on-line ads, which are now a $347-million (U.S.) industry in Canada. Those figures are contained in a new report by PricewaterhouseCoopers LLP, an international accounting and consulting firm that publishes annual studies on the global media industry, with all figures in U.S. dollars. The figures show Internet ad spending in Canada has grown nearly 43 per cent in the past year, a pace that far exceeds any other form of advertising. Internet advertising has more than quadrupled in Canada since 2001, when it was worth just $80-million. Having leapfrogged the out-of-home segment, which is worth $264-million, Web ads are now the fifth-largest part of Canada's advertising industry, behind television, newspapers, radio and magazines. But the Internet still has a long way to go before it surpasses the other forms of media, said Jerry Brown, director of PwC's entertainment and media advisory division. Over the next five years, Internet ads are expected to become an $821-million industry in Canada, but will still trail the magazine sector by $33-million in 2010, the report predicts. "The Internet is catching up, but in absolute dollar terms it's still got a fair way to go," Mr. Brown said. "I don't think any of this should be seen as the Internet's taking over, because it hasn't." Television, which drew $2.5-billion in ad spending in 2005, newspapers ($2.2-billion), radio ($1-billion) and magazines ($739-million) won't be surpassed by Internet ad spending over the next five years, the report says. The rapid growth of the Internet has been impressive, with giants such as Google, Yahoo, MSN and AOL causing a shift in the ad market since 2001. While the other forms of advertising are expected to average single-digit growth over the next five years, Internet ad spending is forecast to grow by an average of 18.8 per cent each year over that time, the report forecasts. Despite being bumped by Web advertising, the out-of-home segment is expected to record the second-highest rate of growth, with increases averaging 6.6 per cent each year. Industry officials say new technology and changing audience habits are making billboards and other displays more relevant, which will drive that rise in spending. Digital ads in elevators, buses and shopping mall food courts are pulling in new dollars, said Bob Leroux, vice-president of sales for Pattison Outdoor Advertising, one of Canada's largest players in the business. And in an era when TV audiences are using gadgets such as digital video recorders to skip commercials, or simply ignoring them by flipping channels, companies are increasingly touting billboards as a resilient form of advertising. "It's the one thing you can't really turn off," Mr. Leroux said. "What's critical today is the fact that everybody is so mobile. A place to reach them is through out-of-home advertising." The rise of Internet ad spending, from a relatively minor player on the landscape in 2001 to a force that is now worth $23-billion worldwide, has put much of the media sector on its heels. Traditional outlets, including newspapers, radio and TV, are now bolstering their own on-line operations to stop the migration of dollars to other parts of the Web. But ad buyers say the growth of Internet ads isn't happening independently of other media. Although marketers are embracing on-line ads, they are often part of a broader campaign, said Hugh Dow, president of Toronto media buyer M2 Universal. "There are certain categories, automotive and financial services for example, where [Internet advertising] is an extremely high priority and increasing at a very significant rate," Mr. Dow said. "But it's very seldom on its own. It's usually in combination with other media, and using other media to create the awareness to go to the site." Web plays catch-up Money spent on advertising in U.S. dollars, in millions 2005 amount spent (annual increase in 2005) 2010 projected amount spent (average annual increase from 2006 to 2010) Television 2,537 (4%) 2005 2010 Television 2,537 (4%) 3,053 (3.8%) Radio 1,044 (4.8%) 1,312 (4.7%) Out-of-home (billboards, etc.) 264 (5.6%) 363 (6.6%) Internet 347 (42.8% 821 (18.8%) Magazines 739 (3.1%) 854 (2.9% Newspapers 2,195 (1.9%) 2,488 (2.5%) SOURCE: PRICEWATERHOUSECOOPER

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