SPINNING THE WEB. (cover story)

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Author: Bogomolny, Laura

WHAT TO WATCH: HOT: ADVERTISING

The web advertising industry is hot--and set to get even hotter in 2006. The biggest story, of course, is the current showdown between Google and Microsoft's MSN. They are vying for an advertising deal with America Online Inc., whose network of free websites boasts an audience of more than 112 million.

Google is known for its superior search advertising technology--getting relevant ads to pop up according to the terms entered into a search engine. MSN, on the other hand, is respected for its display advertising technology--using demographic data or information about a web surfer to aim messages at specific groups. Whichever way AOL decides to go, however, the web advertising market as a whole is picking up steam. In 2005, Canadian advertisers spent $519 million--about 4%--of their marketing budgets on Internet advertising in Canada; media buying company ZenithOptimedia, based in London, England, predicts that will rise by 20% next year, to about $620 million. Says Paula Gignac, president of the Interactive Advertising Bureau of Canada in Toronto: "We're going to see a jump."

Ad agencies with experience in online media planning and web development--Taxi, Henderson Bas, and Cossette, to name just a few--will benefit. So will online publishers who can give marketers what they want: advertising space on high-traffic websites. Gignac even predicts that, for the first time, advertising space on some of Canada's most popular websites will even sell out in 2006. Emerging advertising platforms, such as cellphones, digital signs, and interactive TV may pick up the slack.

PHOTO (COLOR): Time Warner's Richard Parsons

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By Laura Bogomolny