It is widely publicised that the Australian public are spending an increasing amount of time on the web, however the pace at which Australian organisations are turning to advertise on the web is still somewhat slow.
According to the IAB the Australian online advertising industry in 2008 achieved revenues of $1.7 billion and is expected to achieve $2 billion in 2009. However the Australian advertising industry as a whole is estimated to be worth approx $13 billion thus online advertising only represents 13% of entire spend, whilst TV still represents 30% of overall spend.
Despite the lower than expected investment in online advertising, the market is continuing to show growth whilst other sectors are experiencing decline in these more challenging economic times.
This article explores the current trends and my forecasts for the online advertising market;
Online Advertising Spend in Australia
Share of Market: 51.2% in Q1 2009
Key market statistics
• Analysis by Frost and Sullivan in late 2008 demonstrated that 75% of advertisers now spend more than 10% of total media spend on search related activities. This represents 10% growth in the past 12 months in Australia.
• Keyword sponsorship presents 51% of the total search spend, 30% is spent on directory advertising and 19% of is spent on contextual search.
Trend 1 – In-house Management
A survey in early 2009 revealed that fewer advertisers were satisfied with their returns from PPC. As the market will continue to expand, PPC costs will continue to rise and organisations will begin to seek ways to improve their return. This will result in a higher portion of organisations bringing their paid search function in house.
Trend 2 – Contextual Search Growth
The contextual search market will continue to grow as a result of key market drivers which are;
1) Google continues to grow its inventory and capabilities for its third party portfolio of sites providing a low cost alternative search product to increase audience reach
2) Organisations will continue to invest in CPC advertising models rather than CPM.
Share of Market: 24.9% of the total online advertising spend in Australia.
The market in detail
The largest sectors consuming display advertising are; Finance, Computers & Communications and Motor Vehicles which comprise of 46 percent of the General Display spending.
The lack of investment from the retail sector online is clearly displayed in this category. In Australia retail is the largest advertising category representing 20% of all expenditure – however it does not feature prominently within the display category.
Trend 1 – CPC Display Advertising
Overall display advertising will have a bumpy road ahead. Overall display advertising will grow inline with online advertising growth however, it will retain a smaller portion of the market than currently held. Why? Advertisers seek to invest in online advertising that will deliver against financial metrics rather than soft measures. As a result of lower than expected growth and competition from Google’s contextual advertising product, some platform will emerge with a new CPC model.
Trend 2 – Social Advertising
In the coming years display advertising in Australia will evolve to incorporate social tools to allow greater interaction with ads and enable users to share them across the web improving reach and ROI.
Trend 3 – Social Networking Display Advertising
Display advertising across social networks will grow substantially over the coming years as brands attempt to tap into the social phenomenon.
Share of Market: 23.9% in Q1 2009.
Anticipated Future Growth of Market; The classifieds segment is anticipated to grow by 18% in both 2009 and 2010. This growth is mainly due to the continued shift from offline to online media in the real estate and automotive sectors. The recruitment classifieds market which represents 45% of the total market will experience decline in the coming years due to the decline in advertising caused by the recession.
The market in detail
• The fastest growing online classifieds sector in 2008 was real estate which experienced 38 percent growth.
• Automotive was the second fastest growing sector, increasing by 31 percent.
• General and personal online classifieds advertising, accounts for 10% of online classifieds, and will experience the slowest growth due to the relative maturity of these markets.
Trend 1 – Recruitment Sector Fragmentation & Evolution
The recruitment market is starting to experience fragmentation and this will gather pace over the coming years. In addition we will continue to see the introduction of vertical niche job sites. These trends will drive user uptake of aggregator sites to simplify the job hunting process.
In addition to the above recruitment advertising platforms and professional networking sites will evolve and hybrids will begin to become the norm. With this trend we could see a change in the revenue model of recruitment sites – which could involve candidate charges to access networks, or even pay per response models.
Share of Market: .5% of the total advertising market in Australia.
Value of Market: $7 million
Anticipated Future Growth: Mobile advertising is expected to surge to $20 million in 2009 and $250 million by 2013 according to Telyste.
Spend By Sector
In 2007, 50% of mobile advertising spend was concentrated among media and entertainment, banking, financial services and insurance industries, the report found.
Trend – Migration of Budgets
As penetration of the iPhone and Android continues in Australia, the most innovative sectors will invest in this channel – particularly those that can benefit from location based advertising. As a result we may see the migration of local search budgets to the mobile platform.
If you have any additional online advertising statistics or see any additional trends please share them below.