Yahoo’s CEO Terry Semel told the Engage 2006 conference in London that estimates of the Internet advertising market do not account for the impact of ads outside of a PC.
Reuters noted how Semel declared the ad market for the Internet had been underestimated.
Estimates made to date have not accounted for mobile phones or online video.
They have also missed the potential of social media as an advertising platform, as they have focused on paid search and display advertising.
“Video as you all know will become a major factor on the Internet,” he told the Internet Advertising Bureau Engage 2006 conference.
“It will be ever present throughout the Internet and it will find its proper way to advertise.
“So whether it’s mobile or whether it’s video or whether it’s more and more community (social networking sites), these factors have not gone into those numbers, so we think the actual growth potential of advertising online is really being understated.”
The mobile potential for ads has received some validation from Yahoo’s competitor, Google. CEO Eric Schmidt told Reuters in San Francisco he sees a future where free cellphones can flourish, supported by targeted advertising.
He justified this viewpoint by noting that cellphones are becoming more powerful, and the time people spend on them will increase along with the rise in their capabilities.
As people begin to embrace mobiles in the US for more messaging and web usage, the opportunities for advertising will grow too.
The market for online advertising has been forecast to reach several billion dollars. In local advertising alone, Borrell Associates predicted paid search and email marketing will hit $7.7 billion in 2007.
Overall, the online ad market appears to be heading for around $16 billion in the US in 2006. Google is on pace to grab twenty-five percent of that market alone.
If so, this would be the first time a single company has owned a quarter of the online ad revenue. While Google has been tracking toward $4 billion in revenue, eMarketer noted Semel’s Yahoo should hit $2.86 billion for 2006.
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David Utter is a staff writer for Murdok covering technology and business.
