APAC online advertising to hit US$12 billion

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• MagnaGlobal says online advertising in APAC will grow to US$12 billion in 2010
• Expects Thailand to be the fastest growing online advertising market
• Says paid search is the most important component of online advertising

Regional - MagnaGlobal, a division of IPG's Mediabrands, has forecast APAC online advertising to rise 14.4% during 2010 to US$12 billion.

The same forecast also predicts APAC online advertising will grow by an average rate of 12.2% through 2015. Last year, actual online advertising for the region only grew 5.9% from US$9.9 billion in 2008 to US$10.5 billion in 2009, according to MagnaGlobal.

Universal McCann's Malaysia CEO, Prashant Kumar justified the optimism in the figures by saying "I believe we are at an inflection point when it comes to liberating the opportunities the internet offers."

"Today, if we look at the whole internet ecosystem, a whole lot of agencies are investing in the area quite significantly. A whole lot of clients are more open now that the recession has passed and there is a certain degree of optimism," Kumar said.

As a result, Kumar said client marketers are "opening their wallets into taking more risks and are making serious investments in the internet.'

"All these years, internet [marketing] had somehow faced a glass ceiling with only 2% of budget or 5% of budget being used. For the first time certain [local] clients are looking to put serious amounts of money into it. Clients are less afraid of putting 50% of a campaign budget online now," he said.

MagnaGlobal's latest forecast predicts global online advertising to grow by 11.5% to US$68.4 billion in 2011 and by an average of 11.0% through 2015.

By region, the company expects Latin America to be the fastest growing with an average growth rate of 13.9% over the next five years while Thailand - notwithstanding current political turmoil - will be the fastest growing online advertising market off of a very low 2010 base.

It also suggested that industry growth was not directly caused by increasing numbers of consumers online or by rising levels of time spent online.

MagnaGlobal identified paid search as the most important component of online advertising, estimating it to grow 21.9% this year to US$5.66 billion in APAC.

Good news for Google which still is the global leader in search.

"We believe that the Asia Pacific region, including Malaysia, will hugely influence many of the internet trends for consumers and businesses worldwide as 44% of all Internet users come from this region," Julian Persaud, managing director for Google Southeast Asia, said.

In Malaysia, UM's Kumar said he is seeing a lot of "alpha clients" or clients who are ahead of the curve spending more money on paid search.

"The travel industry would be one category in this area but there are a lot of other players who are opening to it big time like in the finance and automotive industries," he said.

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