Net advertising spend to double by 2010 — PwC

25 Oct 2006

The Irish internet access and advertising market is set to grow revenues at a compound annual growth rate (CAGR) of 17pc per year from US$175m last year to US$385m by 2010, it emerged yesterday.

Sinead Johnson, director of strategy, advisory services at PricewaterhouseCoopers (PwC), told that during this timeframe broadband penetration as a percentage of households is forecast to grow from 15pc last year to 22.4pc in 2006 and will reach 48.2pc by 2010.

According to PwC’s Entertainment & Media Outlook, in terms of the number of households with broadband, numbers will grow from 300,000 today to 660,000 in 2010, a CAGR of 27pc a year.

Broadband access spending in Ireland will grow from US$56m in 2005 to US$83m in 2006, increasing to $173m in 2010, with a CAGR of 25.3pc from 2006 to 2010. This is the second-highest CAGR in western Europe after Germany with 39.8pc and an average in western Europe of 12.9pc.

Johnson said that the fact that Ireland to date has been behind international growth trends in broadband is contributing to the high rate of growth envisaged for the years ahead.

“In terms of access rates and online advertising Ireland will achieve higher growth rates than mature economies like the US. We have been behind the curve and are starting from a low base. Therefore we as a country have a higher growth potential,” Johnson said.

“There are two factors underpinning this rapid uptake: the low number of PCs in Irish homes and how many of them have actual internet access.”

Johnson said that the Irish advertising industry will adopt internet advertising in greater numbers

Combined, internet advertising and access will grow from US$175m last year to US$385m by 2010.

Television and newspapers are still by far the most dominant forms of media in Ireland today, worth an estimated US$810m and US$714m respectively. This market is tipped to grow from US$2.9bn in 2005 to US$4.9bn in 2010.

While Johnson agreed that globally newspapers faced decline in the face of new mediums like the internet, she said the decline will be less severe in Ireland, falling only -1pc by 2010. “That is an indication of the buoyancy of the newspaper business in Ireland,” she said.

One market tipped for massive growth is the computer gaming sector, which was worth US$236m in Ireland in 2005. This is forecast by Johnson to grow from US$270m at the end of 2006 to US$415m by 2010. “And that’s just for the software and consoles side of the market as we don’t have figures yet for the wireless segment of the gaming sector.”

In terms of the Irish advertising industry’s grasp of the internet, Johnson disagreed with the assertion that the local advertising industry has so far failed to grasp the medium. “I think it is a combination of a number of factors rather than a lack of willingness.

“As well as coming from a low base in internet penetration in Ireland, there hasn’t been a sufficient measurement process that supports the value of online advertising. However, we are predicting a greater proportion of budgets to go towards online advertising and expect to see richer media being used in campaigns,” Johnson said.

By John Kennedy