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Online advertising to generate over 40 billion $ in revenues in 2008

Contact: Tamara Vlastelica Bakic
Deloitte in Montenegro
Senior Coordinator
+381 11 38 12 100

Since the first online advertisement was sold 15 years ago, online advertising has enjoyed massive growth. In 2008, it is expected to generate $ 41,6 billion in revenue, a 23 per cent increase on 2007 and more than the commercial radio sector. However, 2008 could see online advertising face a barrage of obstacles as a result of consumer antipathy and regulatory scrutiny, says the latest “ Media Predictions - TMT Trends 2008 ” report produced by Deloitte 1.

One barrier to online advertising may be growing antipathy to the online advertisement itself. Survey of US consumers revealed that over three quarters of respondents considered Internet advertisement more intrusive than those in print. Nearly two thirds claimed that they paid more attention to print advertising than to that on the Web. Over a quarter stated that they would pay for advertisement-free online content. “ In 2007, we already saw organized lobbies and “do not track” campaigns. With online behaviour tracking, whose main purpose is to enable the delivery of targeted advertising, being increasingly resisted, the efficacy of online advertising could be seriously threatened,” comments Faruk Muratović, manager in Consulting in Deloitte.

Environmental concerns are likely to affect media sector this year. The media and consumer electronics industries should consider how the living room’s carbon footprint could be reduced without the need to revert to antiquated technology. The relationship between internet TV and its broadcast cousin should become increasingly complementary. Traditional broadcasters should work out how online channels can complement or supplement broadcast content, rather than cannibalise it.

The battle against digital piracy may start to be won, as a two-pronged attack of persuasion, via education, and punishment, in the form of denial of broadband access as well as fines, starts to bite. The diversification of movie theatres as the robust state of the cinema may make it the perfect time to consider how to re-invent a format which has seen relatively little innovation in the past ten years. Technological advance is a great catalyst for the reinvention of the movie theater in 2008, with a key change being in the growth in digital movie theatres.

While music fans are happy to pay several hundred dollars for an MP3 player, they spend an average of only around $20 on purchasing digital downloads for their player. It is time for music to get physical again as customers may be happier to pay, and to pay more, for music if it were contained within a physical wrapper. The industry could evolve from offering digital downloads for transfer to a device, to selling pre-recorded MP3 players, containing a single album or even an artist’s entire back catalogue.
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1 The 2008 series of Predictions has drawn on internal and external inputs from conversations with Deloitte member firms’ clients, contributions from more than 6,000 of Deloitte member firms’ partners, directors and senior managers specializing in TMT, and discussions with industry analysts as well as interviews with leading TMT executives from around the world.

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