Online ad spending to grow fastest in Canada in next 5 years

Globe and Mail - Internet advertising is expected to grow faster in Canada than anywhere else in the world over the next five years, however countries in Asia and Latin America will begin quickly closing that gap soon after, a report suggests.

The annual Global Entertainment and Media Outlook published by the consulting and accounting firm PricewaterhouseCoopers LLP predicts spending on Internet advertising in Canada will reach $2.03b (U.S.) by 2011.

That represents a compound annual growth rate of 23.5%. It is well ahead of the global rate of 13.4% and higher than in the United States, where Internet advertising revenue is forecast to grow 16.1% during that time.

Canadian ad spending online is being driven by the high percentage of broadband Internet users in Canada, which is higher than in most other parts of the world. Meanwhile, online advertising markets in Canada are not yet as saturated as in the United States.

"We have had higher broadband penetration rates than other countries around the world ... and we're now seeing a bigger shift in advertising revenue," said Tracey Jennings, leader of the entertainment and media practice for PwC in Canada.

Looking beyond 2011, however, countries like India and China are expected to make up a lot of ground on North America in terms of growth, Jennings said.

"What you're going to see over the next five years is the other countries' penetration rates are going to grow quite significantly. It just means we're kind of at the head of the curve."

The report predicts advertising trends between 2007 and 2011. It is watched closely by the broadcasting, print and online sectors each year as a gauge of global ad spending trends.

Over all, Canada's entertainment and media market is expected to grow at a compound annual rate of 5.6% over the next five years, hitting 46.8b in spending by 2011, an increase from $35.7b last year.

While Internet advertising will grow fastest, other industries will continue to expand. Radio and out-of-home advertising, such as billboards, will see revenue increase at a compound rate of 11.7% during that time, to $2.8b in 2011.

Ad spending on TV networks and cable channels in Canada is expected to increase to $4.6b, at a rate of 4.5%.

Print media will see slower rates of growth, with ad spending on magazines expanding at a compound annual rate of 1.8% to $1.5b. The newspaper industry will see compound annual growth of 1% in that time, to $3.2b.