Although online advertising has overtaken television and newspaper advertising in Britain, the report said there was scepticism the same would happen in New Zealand.
Despite this, PwC forecasts online advertising will become increasingly lucrative with the market likely to double in size by 2015 to $587 million (about 23 per cent of the sector).
To take advantage of advertising dollars, media companies face the tough task of attracting spoilt-for-choice internet users to their websites.
Video is becoming a big factor in this fight to capture the attention of those online, the report said.
Brett Chenoweth, chief executive of Herald publisher APN News & Media, said video was a valuable "driver of audience" and it was important for news organisations to be producing their own video content.
As well as bringing in readers, the report claimed video was an important part of the "online advertising mix" and cited Air New Zealand's web campaigns - which include clips with stars such as David Hasselhoff and Lindsay Lohan - as an example.
The report claimed that infrastructure projects such as the ultra-fast broadband scheme and upgrades on the mobile network would help grow the online video advertising sector.
Social media was seen as another important tool to draw in online readers.
But while it is often easy to reach a wide audience on sites like Twitter and Facebook, Chenoweth said driving them back to a company website - and accompanying online advertising - was tough.
