This week both 24/7 Realmedia and aQuantive released quarterly results, both companies essentially showed growth to be slightly above the market.
I have owned shares of both throughout this year and earned nice returns. Nothing Google-esque, but representative of the online advertising market’s rise.
Because of those rises, this week the companies disappointed shareholders; here are our thoughts on market’s reaction to the former and the latter.
More importantly, both companies are investing in Asia, and there’s much merit to that strategy:
Both companies see the region teetering on the brink of a serious online ad boom; data from PriceWaterhouseCoopers supports their position. PWC estimates Asia will see the fastest Internet ad-spend growth in the world over the next five years, totaling $110 billion in 2010, driven primarily by growth in mainland China. Ad spend in the U.S. is forecast to grow to a much less impressive $60 billion.
I would like to call time-out and point out that this is the first time I’ve seen the $60 billion figure for the US though. I’ve seen eMarketer peg the US ad market at $25 billion while Morgan Stanley pegs it at $32 billion. Regardless, even at half of PWC’s projection for Asia, the “smart people in the room” seem to think that Asia will easily be a market 2 to 3 times larger than the US for online advertising, and they are probably right, when you consider the boom in China, India, South Korea and the entire region (suddenly, all of that ad inventory we have in India seems more and more valuable every day!).
Disclosure: Of the companies mentioned herein, I’ve owned shares in both companies throughout 2006 but as of this writing I only own shares in AQNT, in fact, I bought today after the 20% meltdown. To read more on why I did that click here.
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