Online businesses booming thanks to Web 2.0

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Online businesses booming thanks to Web 2.0

Independent Australian telecommunications researcher BuddeComm has released a new study which finds solid new business models, backed by spectacular growth in online advertising, are quickly laying the foundations of the new internet economy.

Coined Web 2.0, reflecting the expanded capabilities of the internet, the new digital technologies are altering and enhancing the online experience – allowing people across the globe to interact and collaborate as if they were next door.

According to the two-volume study, '2007 Global Internet' business is booming on the web.

Paul Budde managing director at BuddeComm said, there’s been an explosion of online content and services, largely driven by the internet media giants like Google, News Corp and Yahoo, and they’re making good money from them, too – which is paving the way for our digital future.”

According to the research around $2 billion is estimated will be spent on social network advertising in the US by 2010. Social networking and user-generated content will feature prominently among a range of new killer applications in the Web 2.0 world. But also flourishing are travel-related services, gambling, adult content, music and health services.

In particular, e-health – the delivery of health services via broadband – is seen as a means of providing crucial care efficiently and cost-effectively as people live longer and place greater emphasis on keeping fit.

“This, alone, could fund free broadband access to most households in the developed world,” said Budde

Web 2.0 has also led to a host of new developments includimg Instant Messaging; Peer-to-Peer services; Wikis (user-sourced content); Really Simple Syndication (RSS feeds) for news and information; blogs and alternative revenue streams, such as pay-per-click advertising.

“It is the burgeoning number of households and businesses with broadband connections, which has been the main driver behind the current boom,” Budde said. “In several European countries, 75 percent, or higher, of households have the internet, which gives e-commerce a strong platform from which to do business.”

This year internet advertising expenditure is forecast to top $31 billion worldwide, up from $24.4 billion last year. But of interest, the $31 billion is 7 percent of overall ad spending across all media, up from 5.8 percent of the total in 2006. In 2008, internet ad spending will account for nearly 8 percent of all spending and more than 8.5 percent, or $43 billion out of a total of $495 billion, in 2009.

Some of the basic and more popular online advertising models include pay per click (a company pays every time its ad is clicked), pay per visitor (to a website) and pay per action. But many other forms are emerging, such as permission-based and interactive advertising, which take a more targeted approach to consumers, and thus are likely to become widespread.

But online payment gateways, such as PayPal, have also made a vital contribution to the growth of e-commerce, creating quick and simple ways for consumers to pay for goods and services online.

However the report suggests that there are early indications, despite the spectacular success of Web 2.0 that online spending growth may slow quicker than first thought – to about 10 percent rather than 20 percent by the end of the decade. But that may also be a sign that e-commerce is maturing.

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