Terry Semel, the chairman and chief executive of Yahoo!, said today that, despite the already meteoric rise in online advertising in recent years, its potential growth is being underestimated.

Mr Semel, giving the keynote speech at the Internet Advertising Bureau's annual conference in London, said "most of the growth [in online advertising] is still ahead".

He argued that "actual growth potential for advertising online is being understated" and that the inclusion of advertising related to online video, mobile, social media and IPTV (internet protocol television) will continue to see healthy increases over the next few years.

Internet advertising is already booming. According to the IAB, online advertising spending in the UK soared more than 40% to just shy of £1bn in the first half of this year, putting it on track to overtake press advertising by the end of 2006.

Mr Semel's speech, on the topic of integration, urged advertisers to embrace the latest phase of consumer behaviour based on the concept of "we media" or "people to people" media.

"This is the time to stop talking about new media and old media," he said. "I know we talk about web 2.0, but it's about people to people - a lot more sharing."

A primary driver will be the growth of internet advertising supporting the booming online video market, typified by the popularity of websites such as YouTube, he argued. In addition, the expected rise of advertising around mobile phone content would further fuel growth; media consumption is about going beyond the PC-centric model and looking to connecting all devices.

Yahoo! today struck a deal with Vodafone UK to be the exclusive partner to supply display advertising to its mobile customers.

Mr Semel also pointed to a future involving citizen journalism.

"The user is becoming the producer and they will become new superstars of news," he said. He added that internet users should get paid for content as publishers.

Other speakers at the IAB conference include the BSkyB chief executive, James Murdoch, and the chairman of Reuters, Niall Fitzgerald.

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