boom in online advertising

Online boom far from over, says Aegis boss


Paul McIntyre Marketing Editor
January 25, 2007
Bullish … Robert Lerwill.


* Outdoor set for a bonanza

ONE of the world's biggest buyers of online advertising is predicting a continued boom in Australia's online sector this year, in defiance of local pundits who tip the sector's growth to slow.

The worldwide chief executive of the listed London-based Aegis communication group, Robert Lerwill, said despite the boom in online advertising over the past three years, the Australian internet sector still lagged well behind those in most of Europe, Britain and North America.

Australia's $11 billion advertising industry needed to roughly double the proportion of advertising it allocated to the internet, Mr Lerwill said.

Aegis media units buy more than £9 billion ($22.6 billion) annually in advertising across all forms of digital and traditional media and Aegis is Google's single biggest buyer of advertising space globally.

"Digital organic growth across the world is probably 25-30 per cent and in some markets, particularly Australia, it's higher," Mr Lerwill told the Herald during a recent visit.

"But Australia still has quite a bit of catch-up to do. Total [internet] advertising share here is mid-single digits while in parts of Europe and the UK it's 12-13 per cent already. In the US it's over 10 per cent."

Mr Lerwill said while TV and the internet now "broadly" accounted for the same amount of viewers' time each week, the global TV sector took nearly 10 times more corporate ad dollars than the internet.

"There are fluctuations between age groups but, broadly speaking, the worldwide average is 20 hours a week spent watching TV [per person] with TV getting 40 per cent of ad spend," he said. "Twenty hours a week is also spent on the internet and it gets 5 per cent of total spend. So directionally, more is now going to get spent on digital and the internet."

But in what could be a concern for media owners, Mr Lerwill said the switch of marketing dollars to digital media might not fully benefit media groups with online assets.

"In the old world, if an [advertising] client spent $100, creative and media agencies in total would get, say 15 per cent and the media owner like [Rupert] Murdoch or Channel Nine would get 85 per cent," Mr Lerwill said. "In the new [digital] world, if someone spends $100 on digital, there isn't a huge media owner sucking out a big proportion of it.

"There may be [online advertising to] portals and payments to Google and so forth but quite a lot of the new money is going to people like us for full service arrangements - building websites, search engine optimisation and creative development and therefore a bigger proportion of what a client spends goes through our books."

Mr Lerwill said Aegis, which owns global media buying and planning agencies and market research operations such as Carat and Synovate, was already generating 20 per cent of its total media revenues from digital and online activities.

"We're well ahead of our competitors at the moment," he said. "Last year on a worldwide basis for the [marketing services] industry, only 5 per cent of revenues came from digital. But that 5 per cent will change and change very quickly.

"As long as we are growing ahead of the market and therefore getting market share, we can get a premium rating from shareholders because of our faster-than-market-average growth."