Last year the Interactive Advertising Bureau of Canada predicted that online ad sales would grow by 46 percent in 2005. When the final numbers were crunched online advertising was actually up 54 percent, reaching $562 million. Of the $562 million received by Canadian Online publisher sites in 2005, approximately $124 million or 22 percent of ad dollars were allocated to the French Canadian market.

Projections for 2006 are predicting yet more growth. The Internet Advertising Bureau expects online ad sales to grow by 43 percent to $801 million by the end of 2006. If the predictions are correct online ads will account for 6.4 per cent of all 2006 ad spending in Canada.

"Advertisers have done a great job of responding with investment that matches the multitude of research studies, which have pointed to huge leaps in consumer passion for, and time spent with the Internet channel," says Patrick Lauzon, Chair of the IAB. "And when you consider that Online is really the only media that can follow the consumer through the entire purchase cycle — from building product awareness and consideration, to allowing in-depth product research and even product purchase — it just makes sense."

Display advertising, which includes the graphic "banner" ads seen on content-based websites, accounted for the largest share of online ad spending. These ads are typically sold on a CPM (cost per thousand ads displayed), CPC (cost per click) or per lead/sale basis. In total display advertising accounted for 41 percent of total ad revenues in Canada in 2005.

Search advertising was the second biggest revenue generator, accounting for 35 percent of total ad revenues in 2005. Classified and directory advertising accounted for 22 percent of total ad revenues and email advertising tallied in at just 2 percent.

"There are two things that are important to note in the findings," says Paula Gignac, President of the IAB. "First, is how the IAB Canada Revenue Survey is in sync with trends shown in the U.S. and other markets, with Display advertising holding its own, while Search revenue grows at a faster pace. Second, is how the share of dollars allocated to Internet advertising (almost 7 percent of total ad spend in Canada for 2006), is quickly moving towards the 10 to 15 percent that cross-media optimization studies have long recommended as necessary to properly utilize the Internet channel.

"And while 7 plus percent is a good result, it's definitely shy of where Internet spending in Canada should be, given that there are over 21 million unduplicated users, or 62 percent of the total Canadian population Online every month. To compare, in the United States, only 57 percent of the total population uses the Internet every month.

"If we can get the Canadian industry to a billion plus dollars by 2007, and Internet spending closer to 9 percent of the total, then," says Gignac, "we're really going to see a tipping point for the medium."

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