The online advertising industry in Canada is booming.

According to the 2009-2010 Canadian Online Advertising Revenue Survey, online advertising in Canada has a higher growth rate than any other type of advertising, showing an increase of 14 per cent since 2008.

In its 11th year of publication, the survey, conducted by Ernst and Young LLP on behalf of the Interactive Advertising Bureau of Canada (IAB), also states that the online advertising industry's revenues have grown exponentially in the last ten years, from $98 million in 2000 to an expected $2.1 billion in 2010. 

The overall findings of the survey, briefly outlined below, indicate that the vibrant industry will continue to expand in coming years.

Revenue by advertising format

The survey shows that virtually all facets of online advertising in Canada are showing growth.

• Search advertising: $741 million, 41 per cent of market
• Display advertising: $578 million, 32 per cent of market
• Classifieds: $467 million, 26 per cent of market.

Collectively, these three advertising formats represented 99 per cent of the online ad market in Canada.

French language online advertising revenues also grew by 11 per cent over the year, accounting for 19 per cent of total online ad revenues across Canada in 2009.

Online ad versus advertising in other media

Online advertising has shown higher growth in revenue than advertising on any other medium in Canada. Its 14 per cent growth rate outperformed all other sectors, most of which experienced overall declines between 5 and 18 per cent of their last year's total.

Revenues generated from online advertising are also closing the gap on or even surpassing advertising revenues from other platforms, generating revenues that are at

• 90 per cent of those of Daily Newspapers;
• 59 per cent of Television; and
• 124 per cent of Radio.

Even with these numbers, online advertising revenues represent just 13 per cent of the overall domestic market in Canada, slightly less than the 14.3 per cent share of the market that online advertising enjoys in the USA and significantly less than the 27.3 per cent in the UK.

Perceived challenges for the industry

The IAB report included a section that acknowledged both the opportunities and difficulties that online advertising will face as it moves forward:

• Keeping business profitable and sales teams educated as advertising transitions to digital;
• Continued press for rate decreases in CPM and CPC;
• Developing inventory in Video channels, mobile and tablet platforms in response to changing consumer demand and behaviour;
• Competition from new players entering the market;
• Promoting online advertising without cannibalizing other revenue from traditional media; and
• Taking advantage of the growing impact of social media.

Despite the lengthy list of challenges, transformations in technology and changing consumer behaviour are leaning towards digital, meaning that online advertising revenues have nowhere to go but up.

For more information on the IAB or the results of the survey, visit the Interactive Advertising Bureau of Canada's website.

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