For Shenda Loughnane, managing director of Ican, “Ireland's leading interactive advertising agency”, there are two words which she uses to sum up the current state of her business “crazy busy”. It seems that last year, a lot more people discovered the role of online advertising and now the forecasts for 2006 appear equally bright.

She says that her agency's business last year was up by over 30 cent, a huge leap forward and slightly ahead of Ireland's online advertising business generally. Loughnane put the value of online last year at about €14 million and even though it is less than one per cent of total ad spend the growth curve is accelerating fast.

PricewaterhouseCoopers said online spend in Ireland is due to grow at a rate of 13.4 per cent a year reaching US$60 million by 2009. But growth lags well behind the UK where online spend has outperformed cinema and radio. Just recently, internet spend in the UK actually overtook outdoor for the first time, with €1 billion in annual revenues.

The UK has been helped by the rapid spread of high speed broadband. A recent report in the US forecast the sector could be worth $16 billion by 2009, double its present level. In Europe, the figure is €4.7bn.

Industry observers now believe that online can see credible growth, leaving behind the early days of the internet when its promise was marred by hype. ZenithOptimedia predicts that the internet's share of the total UK ad market will rise to 6.9 per cent in 2007, compared with 1.2 per cent in 2000, while TV, radio and press will suffer.

Procter & Gamble in the US has cut its TV budget by 25 per cent, re-directing some of the spend online. Major advertisers in finance and telco see online as cost effective measurable. With finance, consumers can fill in their forms online and if there are any errors, these are readily picked up.

Loughnane says the web is a handy way of making customer contact and getting feedback. Ican that invented the idea of the calculator which is now a standard feature with many financial online campaigns. Apart from finance and telcos, travel is a big growth sector.

While the net is great for reaching young consumers who may miss out on other media, it appeals to people of all ages. Loughnane says online is a good way to reach all age groups and all demographics. The one snag is that some new online advertisers think that miracles can be achieved overnight because it is such an instant medium. “You can create and plan a campaign in three to four days,” Loughnane said, “but it's not ideal. You need thinking time, so we ask for about a week on the creative side and about a week on production.”

It is an economical medium. €10,000 to €15,000 can buy a decent online campaign, while €50,000 will ensure a substantial push. Short termism is still a big problem but at least a lot of advertisers are now saying that they will try online, which is a sea change from old attitudes.

Some advertisers are creating new media departments, complete with e channel managers. But a lot of online advertising is aimed at consumers, while business to business(B2B) has been slower to develop. Ican has a four strong creative team and another foursome which works on production. In all, the agency, which is part of Denis O'Brien's Communicorp group, has 14 staff, with plans to add three more soon.

A miscellany of advertising models work well online, including data base, search based and email advertising. There is a move away from the more traditional banners. Streaming works well for film companies. But the take-up of more sophisticated models, like streaming, depend on the a wider provision and use of broadband.

Loughnane says that while some web agencies say they do online campaigns, there are only about three genuine online shops. Brando recently joined the ranks and one of its investors, Damian Ryan, set up Ican before eventually selling it on to Denis O'Brien.

“It takes a specialist agency to tackle the market properly,” Loughnane said. Creative and media are now closely linked and you also have such huge technical requirements. Loughnane is unsure about the advances being made by mainstream ad agencies into online, as she feels they may not have the technical know-how needed to do online properly.

She says online advertising in Ireland needs a body like the Interactive Advertising Bureau in London, which would be solely dedicated to promoting its benefits – despite the fact that the Irish Internet Association works in this area.

The old Interactive Advertising Bureau (IAB) was absorbed into the Irish Direct Marketing Association (IDMA) and many people working in online advertising are not convinced that this was the best way forward and hold the view that the old IAB has disappeared without trace.

Loughnane also points to one of the signs of the online market maturing, the fact that the Joint National Internet Research (JNIR) committee is up and running. So lack of reliable data often used by critics of online advertising should now be a redundant argument.

Loughnane said that some of the top internet sites in the UK are now starting to realise the benefits of selling their Irish traffic to local advertisers. The blockage has been a big problem until recently, but it is now starting to ease considerably.

“One of the advantages of the UK online market is that it has such a wide variety of sites and services that we don't have here,” she said. “The UK rather than the US offers the nearest and most relevant model for Ireland's burgeoning online ad industry.”

Loughnane is sceptical about comments made by Bill Gates of Microsoft where he predicts that in ten years time, the difference between online and offline advertising will not matter any more, because everything will be net-based, with print and broadcast all being delivered online.

There will always be room for other media. If other media are suffering now as clients put more of their budgets into online, one must remember that print still accounts for two-thirds of all ad spend in Ireland.

UK media companies, under pressure from falling ad sales, are buying websites to defend core markets. ITV moved in on Friends Reunited with a