By Elizabeth Wilmot

The online advertising industry in South-east Asia is set for a boom in the next two years, according to a study conducted by search giant Yahoo and online research company Nielsen Online.

This rapid growth, coming off a fairly low base, is being driven by the fast growth of Internet usage in the region

'The upward trend in online advertising across South-east Asia will not be as hindered by the shadow of a global economic crisis, largely because the region is benefiting from the shift from traditional ad dollars to more effective and measurable digital media,' said Mr Ken Mandel, vice-president of Yahoo South-east Asia.

The study, carried out between June and August this year, surveyed six key markets - Singapore, Indonesia, Malaysia, the Philippines, Thailand and Vietnam.

It looked at two types of advertising: display advertising, for ads which might pop up on a website; and search advertising, where targeted ads arrive with online search results.

Results of the study show that the online advertising industry in the region is expected to grow by more than 60 per cent between this year and 2010.

Display ads will still take the lion's share but searches are growing quickly. In Singapore, for instance, the forecast spending for this year is about US$24 million (S$36 million). In 2010, the figure is expected to increase to about US$26.1 million.

For search advertising, the forecast spending for this year is US$17.5 million, and in 2010, it is set to rise to about US$25.5 million.

According to Nielsen Media Research, the total media spending in Singapore was estimated at $2 billion last year. Traditional mass media took the major share of ad expenditure, with newspapers and television both constituting about 75 per cent.

Online media expenditure from participating publishers was first monitored last year, and it recorded a promising 1.6 per cent of total media spending at $32.3 million.

The main reason behind the projected future growth, according to the study, is the surge in Internet usage across South-east Asia with the advent of broadband and wireless Internet connections.

'Findings from this study indicate that the necessary growth drivers are in place and that the online advertising industry is on the cusp of significant growth across all South-east Asian markets,' said Mr Stuart Pike, industry solutions director for Nielsen Online Asia Pacific.

This article was first published in The Straits Times on December 10, 2008.