Online alliance corners market
Simon Canning
March 22, 2007
AUSTRALIA'S $1 billion online advertising market is about to be dominated by a single player following an alliance between the global company DoubleClick and local operator Hostworks.
Last month, Hostworks claimed to have more than 52per cent of the national market, serving online advertising for clients as diverse as News Digital Media, Ninemsn, Seek and Sensis.
That share is now expected to increase to more than 80 per cent for the combined group.
Hostworks and DoubleClick help designate where advertising on the internet flows, for website owners and advertisers.
The move by DoubleClick to sign Hostworks gives Hostworks access to software that allows more seamless delivery of ads, while DoubleClick will benefit from Hostworks' local dominance; it has dozens of national advertisers on its books.
"The two leading technology service providers in the marketplace have got together to really dominate the space," Hostworks' sales and marketing director Klaus Bartosch said.
"We are the company that presently manages most of the top websites that are outsourced. Many of those customers are looking for online ads to fuel the growth in development of their businesses. By aligning ourselves with the global market leader in this space I think we are jointly going to be a fairly significant partnership."
The partnership will present billions of online ads to consumers each month.
"You are talking about volumes of ads of 3.5 billion or more," Mr Bartosch said. "What is interesting is the pace at which the market is growing. Market analysts suggest it is growing at 65 per cent. What we are seeing is 100 per cent or more. That kind of growth has been going on for the past three years and we expect that is going to continue for at least the next three years."
Mr Bartosch said growth driven by existing companies taking their advertising strategies online would be augmented by business from new companies looking to the internet. "For them, ad serving is a key part of their underlying strategy," he said.
Consumers should find the partnership would allow ads to be delivered more quickly, and therefore web pages should load faster, Mr Bartosch said.
"It will also be a more relevant ad display," he added. "What the consumer is going to get is a page display that is faster, and so the convenience and pleasure of surfing the web is increased. You may not be aware of it, but if ad serving is not effectively delivered, page display is slowed down."
Mr Bartosch said ad delivery became critical during events that saw high internet traffic.
For example, he said, when Steve Irwin died last year so many Australians rushed to the internet for updates that many advertising messages failed to get through.
"You just have to look at the last few months with even major companies struggling to deliver ads when the demand on their websites is very high," he added.
Last year, internet advertising in Australia topped the $1billion mark for the first time, with Hostworks' customers accounting for $525 million of that.
The deal was an important one for DoubleClick, as Hostworks had been working with its biggest rival in Australia, Accipiter.
"If you look at it in terms of ad serving, between us now we own something in the order of 80 to 90 per cent of the market. But, importantly, it is a market that is growing rapidly and there are a lot of new customers seeking these services," Mr Bartosch said.
DoubleClick Asia-Pacific managing director Kaylie Smith said the deal would allow the company to increase the number of advertisers using its advertising software packages.
HWG
hostworks group limited
