Internet ad surge aids portals
Executives at Onet.pl, the country's largest Internet company, proclaim that their firm is no longer a money burner, largely as a result of an online advertising boom. But does this mean the break-even point for Internet firms is just around the corner?
According to the Interactive Advertising Bureau Polska (IAB), an Internet advertising industry association, investment in Internet advertising was the fastest growing segment of the advertising market as a whole last year, growing by an impressive 40-45 percent. And while the first six months of this year saw Internet advertising revenues jump by 50 percent, albeit from a low starting point, the IAB envisages further growth of 25 percent this year. By comparison, Expert Monitor, a market research company, says expenditure on TV, press and radio advertising grew jointly by only 7.7 percent in the first half of the year.
"We draw roughly 70 percent of our revenues from marketing services," says Łukasz Wejchert, president of Onet.pl. "We are very pleased with the performance of our current activities," he says, pointing out that his portal sees approximately 1.5 million different customers every day, a figure comparable to the readership of Poland's leading newspapers.
Wejchert reveals that Onet.pl managed to post an operating profit during 2003, but as to the possibility of reaching bona fide net profitability this year, that will have to wait until its financial reports come out later this month. But he confidently asserts that Onet.pl is far ahead of its nearest competitor, Interia.pl, and it seems likely that this situation will continue for some time.
Tomasz Jażdżynski, Interia.pl's president, though, is equally optimistic. "After three years, we can now really start to look forward," he says. Buoyed by the new results, Jażdżyński reveals, "We are now even more sure of being profitable by next year," stating, "This year we'll have an EBITDA over zero, with earnings over zero set for 2005."
And Witek Samborski, an IT analyst for Dom Investycyjny BRE Bank who advises on ComArch stock, the company that owns Interia.pl, isn't inclined to burst Jażdżyński's bubble just yet.
"If they don't get overexcited and don't do crazy things with investments, they could make a cash profit," he says.
But Samborski doesn't believe in the pure advertising revenue-based business model, at least not for Interia.pl, which he believes must continue to develop its other two key revenue sources, viz. software production subcontracting, borne of ComArch's operations, and e-commerce, such as its cooperation with Allegro.pl, the country's eBay clone.
"The whole market is growing - that's for sure," says Samborski, though he accepts that some of the increased ad sales have been at the expense of Wirtualna Polska, the third-placed portal that is currently going through bankruptcy proceedings.
According to the Interactive Advertising Bureau Polska (IAB), an Internet advertising industry association, investment in Internet advertising was the fastest growing segment of the advertising market as a whole last year, growing by an impressive 40-45 percent. And while the first six months of this year saw Internet advertising revenues jump by 50 percent, albeit from a low starting point, the IAB envisages further growth of 25 percent this year. By comparison, Expert Monitor, a market research company, says expenditure on TV, press and radio advertising grew jointly by only 7.7 percent in the first half of the year.
"We draw roughly 70 percent of our revenues from marketing services," says Łukasz Wejchert, president of Onet.pl. "We are very pleased with the performance of our current activities," he says, pointing out that his portal sees approximately 1.5 million different customers every day, a figure comparable to the readership of Poland's leading newspapers.
Wejchert reveals that Onet.pl managed to post an operating profit during 2003, but as to the possibility of reaching bona fide net profitability this year, that will have to wait until its financial reports come out later this month. But he confidently asserts that Onet.pl is far ahead of its nearest competitor, Interia.pl, and it seems likely that this situation will continue for some time.
Tomasz Jażdżynski, Interia.pl's president, though, is equally optimistic. "After three years, we can now really start to look forward," he says. Buoyed by the new results, Jażdżyński reveals, "We are now even more sure of being profitable by next year," stating, "This year we'll have an EBITDA over zero, with earnings over zero set for 2005."
And Witek Samborski, an IT analyst for Dom Investycyjny BRE Bank who advises on ComArch stock, the company that owns Interia.pl, isn't inclined to burst Jażdżyński's bubble just yet.
"If they don't get overexcited and don't do crazy things with investments, they could make a cash profit," he says.
But Samborski doesn't believe in the pure advertising revenue-based business model, at least not for Interia.pl, which he believes must continue to develop its other two key revenue sources, viz. software production subcontracting, borne of ComArch's operations, and e-commerce, such as its cooperation with Allegro.pl, the country's eBay clone.
"The whole market is growing - that's for sure," says Samborski, though he accepts that some of the increased ad sales have been at the expense of Wirtualna Polska, the third-placed portal that is currently going through bankruptcy proceedings.
