SYDNEY: Online advertising is set to become Australia's number three medium after newspapers and TV by the end of 2007, according to latest projections by the country's Audit Bureau of Verification Services.

The web ad market crashed through the A$1 billion ($774m; €595m; £398m) barrier last year when marketers spent 61% more on banner ads, classifieds and sponsored links than in 2005.

The Internet Advertising Bureau, which commissioned the audit, says the fourth quarter of 2006 was unusually strong as a result of electronics companies marketing heavily in the run-up to the holiday season.

Overall search and directories grew by 81% to A$399 million, or a fraction under 40% of the total online ad market. Banner ads grew by 56% to A$303m, while classifieds grew by 45% to A$299m.

Analysts believe web advertising in 2007 could compare favorably to last year, pushing past the magazine sector and pulling further away from the radio ad market which it overtook in 2006.

Bullish - some might say excessively optimistic [WARC News: 15-Nov-06] - Steve Allen, managing director of Oz media buying shop Fusion Strategy, is confident the online ad market will continue to grow by 54% this year.

He opines: "There is now sufficient critical mass of eyeballs that mainstream advertisers are now considering this a mainstream medium."

If Allen's forecasts are proved correct, online ads will make up 13.4% of the total market, which is currently worth A$11 billion.

Data sourced from Sydney Morning Herald; additional content by WARC staff