Online advertising has experienced a 30% growth year-on-year, with advertisers spending a record $450 million in the third quarter of this year, new figures from the Interactive Advertising Bureau (IAB) Australia have revealed.
The latest Online Advertising Expenditure Report, compiled by PriceWaterhouseCoopers for the quarter ending September 30, suggests advertisers have not pulled back their online spend in the face of harsh economic conditions. In fact advertisers spent over $100 million more during July to September this year than they did in the same period last year.
However the IAB predicts there will be a slide in revenue during the fourth quarter as the full impact of the global economic situation is realised.
“While growth is expected to soften in Q4 we’re still anticipating a 20% year-on-year growth, with online proving to be a winner in tough economic times because of its accountability, measurability and bang for buck,” said Paul Fisher, CEO of the IAB.
All three categories of online advertising, general display, classifieds, and search and directories reported strong year-on-year and quarter-on-quarter growth. Search and directories dominated advertisers’ spend, accounting for $212 million of total spend for the quarter, a growth of 13% from the previous quarter and a 33% growth year-on-year. General display totalled $125.5 million this quarter, a 10% growth on the previous quarter and 29% growth year-on-year. Classifieds experienced a 2% growth from last quarter and 25% growth year-on-year, totalling $113.75 million.
The finance, computer and communications, and motor vehicle sectors dominated general display advertising, accounting for 52.2% of spend in this category. Recruitment continued to dominate spend in classifieds, followed by real estate and automotive.
Meanwhile a 2009 market forecast by Frost and Sullivan indicates that for the first time advertisers will cannibalise their traditional media budgets, particularly print, to spend more online, as opposed to increasing budgets.
“The digital market is well positioned to continue to grow relatively strongly in what will be a very difficult year next year economically and in the market,” said Darryl Nelson, senior analyst at Frost and Sullivan.
According to Frost and Sullivan’s latest research 49% of respondents said they would increase their online advertising budget in 2009 while 5% confirmed they would be scaling back.
The analysts forecast that online advertising spend for 2009 would comprise 10-30% of total media budgets. Search retains its hold as the biggest growth area garnering 46% or $606 million of spend in 2007-2008 while for 2009 it is forecast to capture 32% of ad spend. “There is little indication that it will soften at all. Christmas is traditionally high for paid search and this figure includes anticipated strong Christmas period this year,” Nelson said.
He added that in the last 2-3 years the growth in digital media budgets has bee the result of advertisers increasing budgets and not changing existing media spend in other segments. “This is the first year that cannabalisation is starting to emerge from other sections of the media budgets and this is expected to accelerate due to a slowing economy. A lot of this is moving from print media , particularly classifieds. “
