Online Advertising: Beyond Good and Evil

By Aleksandra Bosnjak, Lead TMT Analyst

Rising broadband penetration is helping online advertising cut into the traditional media distribution market and the total online advertising market is estimated to be worth USD180bn globally.

Developing a successful value-added online advertising revenue stream is essential for future revenue growth for telecom operators, traditional media and the 'online advertising' veteran players such as portals.

Social media is currently one of the biggest opportunities, as it not only opens up the younger digital generations to telecoms operators and broadcasters, but also a whole realm of possibilities around interactive online services and applications, as well as focused applications such as targeted advertising.

This report is an all-encompassing and hybrid analysis of the online advertising market, tackling the major trends, opportunities, revenue flow issues and threats faced by telecom operators, traditional media and broadcasters, as well as current online advertising veterans, all trying to expand their revenue footprint in this space.

Among the key messages are:

* There will be a massive fragmentation of online ad power, as some of the core online players relinquish control to competitors.

* 2008 started with online portal consolidation moves in the form of a Google-Yahoo!-Microsoft bidding war, an event which is sure to reshape the online advertising space, regardless of the final outcome.

* StrategyEye's executive interviews identify 3 key risks associated with telcos and mobile operators' business models.

* The key social media phenomena such as Facebook and Bebo are core targets for investors and acquisitions, creating a massive commercial opportunity for both publishers and advertisers.

* The future outlook of online advertising may be in targeted advertising. StrategyEye examines this double-edged sword.

Table of contents

1. Setting the scene: Evolution from a traditional media advertising VC to a crowded online/mobile advertising

* Cash flow and revenue sharing flow in an advertising value chain
* Top 10 global advertisers in the world according to ad spend
* Top 10 global agencies

2. Realising the promise of online advertising:

* How big is the ad-funded opportunity?
* Broadband context: End-user online content revenues vs. online advertising?
* Can ad-funded, paid model, and subscription models co-exist? How?

3. Impact of online advertising on broadcasters

4. The role of internet portals in the evolution of online advertising

5. Telecom and mobile operators view on online advertising - developing the converged business model

* How will the market for mobile advertising develop?

6. What can be learnt from social networks and Web 2.0?

7. Future outlook: Targeting and the real value of online advertising market

Published: April 2008