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Online General Advertising Slows But Still Grows Finds Frost & Sullivan - Revenues increase by 19% in 2008/09
Online General Advertising Slows But Still Grows Finds Frost & Sullivan


NewswireToday - /newswire/ - Sydney, Australia, 2009/09/29 - Revenues increase by 19% in 2008/09.

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Despite a first quarter slowdown due to the global financial crisis, revenues from Australian online general advertising grew by 19% in 2008/09 to reach a total market value of AU$510 million. Increased scrutiny due to squeezed marketing budgets continues to drive advertisers towards the online channel, but at the same time there are also demands on the industry for greater accountability and returns on investment from campaigns.

Mobile advertising also grew during the year but it remains at a nascent stage with take-up hampered by a lack of industry standardisation and lack of sophistication in targeting and personalisation. The total value of the mobile advertising market for 2008/09 was AU$7.5 million.

The findings are contained in Frost & Sullivan's most recent annual analysis of the online advertising market, Australian Online General and Mobile Advertising Report 2009-2013. The report documents the trends and performance of mobile and online advertising activities such as display advertisements, electronic direct mail, integrated content, streaming video and email newsletters during the twelve months to June 2009.

The global economic downturn had its biggest impact on Australia's online general advertising revenue in the first quarter of 2009 but by the end of the second quarter the market was showing some initial signs of recovery. Frost & Sullivan predicts that the crisis will continue to impact the market through to mid 2010.

Phil Harpur, Senior Research Manager - Australia and New Zealand, Frost & Sullivan said, "Although 2009's overall growth is slightly down when compared to the 22% increase in 2008, it's still a very strong result given the economic environment. We anticipate that the online general advertising market will experience healthy growth over the next five years, reaching close to AU$1.2 billion in 2014."

Revenue trends
Revenue yields for site display continued to come under pressure due to the shift towards performance based display advertising (such as the cost per click pricing model). Although this trend has been noticeable for some years, it gained momentum in 2009 as advertisers searched for more cost effective solutions.

The report notes that although site display revenues may pick up again as economic conditions improve, the swing towards performance based solutions is expected to grow steadily over the next five years.

Email direct marketing (EDM) was another strong performer, recording a growth rate of 20% during the year. Frost & Sullivan suggests that this is in part due to the strong niche that EDM has created for itself as a high margin activity that capitalises on completed creative campaigns.

Online video's market share increased significantly during the year, used by 25% of respondents in 2009 compared to 17% in 2008. This trend is expected to continue over the next few years especially as advertisers look for alternatives to the mainstream and established online display market.

Online general advertising expenditure
Forty percent of participants indicated that their company's online general advertising budget increased in 2009 compared to the previous year, while 21% of companies indicated a decrease and 37% stated there had been no change. These results suggest greater stability in spending per organisation than in previous years, with a much higher proportion of companies now maintaining or decreasing budgets.

Spending intentions for 2010 point to a steady rise in online general advertising revenues with 26% of companies stating they will be increasing their budgets and 15% planning budget reductions.

Mobile advertising
All Australian carriers are exploring mobile advertising as a revenue stream but to date, such advertising remains the province of major advertisers and brands and the sector is well short of reaching a critical mass of users.

More than half of all respondents (58%) indicated an intention to increase their mobile advertising budget in 2010, but a significant number (36%) stated there would either be no change or a decrease in their current budget.

Frost & Sullivan cautions that it will be at least another three to five years before the mobile advertising industry enters a more mature stage of development and is seen as a mainstream alternative to the Internet and offline channels such as print and broadcasting.

Australian Online General and Mobile Advertising Report 2009-2013 is part of the Frost & Sullivan Digital Media Advertising Program 2009 subscription. The report analyses trends in online general advertising during the twelve months ending 30 June 2009. For the purposes of the research, online general advertising includes online display ads such as banners, skyscrapers and pop-ups; e-newsletters; email direct marketing; online video; sponsorships and integrated site content; and other activities. Data for the report was gathered through interviews with 220 senior management level executives with control or insight into the business' marketing budget and strategy.

Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best-in-class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best practice models to drive the generation, evaluation, and implementation of powerful growth strategies. Frost & Sullivan leverages over 45 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from more than 35 offices on six continents.

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Online General Advertising Slows But Still Grows Finds Frost & Sullivan

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