Thailand is expected to be the world’s fastest growing online advertising market this year according to Radio Business Report (RBR).

The article, which focuses on a recent global online advertising forecast from MagnaGlobal, predicts online advertising spend will increase rise by 12.4% across the world to the tune of US$61.0 billion.

Key excerpt on growth markets.

By region, they [MagnaGlobal] expect Latin America to be the fastest growing region, with $3.5 billion of total supplier advertising revenue in 2015 on an average rate of 13.3% growth over the next five years. Among specific countries, and notwithstanding current political turmoil, Thailand will be the fastest growing online advertising market off of a very low 2010 base. Among larger markets, China and Russia will post the fastest sustained rates of growth over the next five years.

This year has already seen a huge increase in interest in the internet in Thailand, with the number of Facebook users growing at a rapid rate, whilst Twitter (unfortunately without official figures), mobile internet and news sites growing thanks in a large part to the recent UDD political protests.

Online advertising currently makes up significantly less than 2% of the total advertising budget spent in Thailand.

Future growth is significant as the advertising industry spends its money where its audiences are. An increase in online advertising spend shows clearly that more people in Thailand are actively using the internet.

Further details from RBR explain why online advertising is becoming more important, many of these factors apply to the Thai market.

Paid Search has quickly become the most important component of online advertising, and in 2010 this segment will account for $29.8 billion, up by 16.5% over 2009 totals on a constant currency basis. Google remains by far the global leader in Search, although a handful of other suppliers of search advertising are dominant in certain countries. Unfortunately for Google, China and Russia – the fastest growing large markets for online advertising – pose a challenge for foreign-based search engines.

Thailand is a Google dominated market as these recent Alexa statistics clearly show. Google has its main .com site, Thai specific site and YouTube (which it owns) in the top 5 most visited sites. Both Microsoft (Live and MSN) and Yahoo maintains a sizeable presence in Thailand, but Google remains top dog while no Thai-specific search engines feature with any significance.

All other online advertising will account for $31.2 billion, up by 8.7% in constant currency terms. Other online advertising is much more diffused, with a handful of global portals, such as Yahoo and Microsoft, and many regionally strong publishers (often associated with print publications) capturing most of that sector’s revenue. Although they provide an important constraint on inflationary conditions, advertising networks retain their importance to advertisers given their ability to aggregate and monetize vast quantities of inventory in an inexpensive manner.

As above both Yahoo and Microsoft enjoy a reasonable presence and offer a distinctly different advertising option to Google.

In Thailand, and across Southeast, regional advertising networks are sizeable too. Networks such as pan-Asian Admax or Adsfactor offer regional specific advertising packages that deliver advertising campaigns which target specific audiences by placing adverts on a number of targeted websites. For example, websites read by teenagers, or news sites frequented by young mothers.

Social networking sites such as Facebook capture a large and growing share of audience time. While advertising is becoming increasingly important for social networks – and is undoubtedly growing much more rapidly than the rest of online advertising – they generally punch “below weight” given the premium pricing that conventional content publishers can extract from their inventory.

With few Thai businesses fully embracing social networks, such as Facebook, my initial thought is that social networks themselves are unlikely to  see the bulk of this ‘new’ online ad spending. They have, however, been instrumental in highlighting the potential and influence of online media and the internet in Thailand, which in turn has attracted new ad spending.

One final factor is mobile.

One innovative area receiving much attention at the present time is mobile advertising. While mobile clearly represents a growth opportunity, this will continue to be a modestly sized segment of the digital media eco-system as long as different segments of marketers have alternative media vehicles which better meet their business objectives. However, as m-commerce (such as ring-tone sales) and mobile marketing (such as a personal banking application) become more prevalent, an endemic ecosystem will gradually emerge, followed shortly thereafter by growing volumes of advertising revenues.

Despite AIS estimating Thailand has 12 million internet users, smartphones and internet-enabled devices are fairly niche. In comparison mobile commerce and mobile marketing – particularly mobile banking, as the GSMA has publically stated – currently enjoys greater market potential as its content has less barriers. While many mass market handsets may not be able to access the internet, consider numbers can purchase ringtones, or make transactions and use SMS marketing.

As smartphone ownership increases, and mid-tier and entry level devices increase it is expected that mobile internet access and usage, so as mobile social networking, will increase to a level at which mobile advertising becomes a relevant medium for business.

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