Online advertising sees further growth in 2009

Recent figures published by the Internet Advertising Bureau (IAB) in Australia show that the online advertising sector continued to buck the trend seen by the wider advertising market and recorded further healthy growth in 2009, with a 9% year-on-year increase to record a total spend of $1.87bn to the end of December.

The results from the quarterly Online Advertising Expenditure Report (OAER), compiled by PricewaterhouseCoopers (PwC), also showed that for the three months ended 31 December 2009, the total expenditure was $513m – the largest fourth-quarter recorded and an increase of $50.5m, or 10.9% from the fourth-quarter of 2008.

The IAB says that the continued growth of online advertising expenditure comes at a time when the total advertising industry is expecting a decline of up to $900m in the Australian marketplace for 2009 due to the impact of the global financial crisis. This shows that many companies are not cutting back so much on their online marketing spend as in other areas, or that new companies are starting to use online advertising in some form.

The general display advertising and search sectors both performed well for the full year, with search and directories advertising accounting for just short of $1bn or 50.5% of total expenditure, representing a growth of 17% year on year. This is mostly comprised of Google Ads (AdWords) expenditure, which dominates this category and although Google doesn’t release their figures, the estimate is based on the same formula used by PwC in their regular surveys.

Spend on display advertising also grew in the year, up by 7.2% and it accounted for almost $500m or 26.6% of the total expenditure for the 12 months. However, classified advertising is the one sector that continued to lose share and saw a slight decline of 2.3% year on year, accounting for 22.9% of total expenditure for the year.

Within the general display figures, email based advertising comprised $9.3m of advertising expenditure for the last quarter, up from $7.9m in the previous quarter. Video based advertising increased its share of advertising expenditure from $4.7m to $5.3m for the same period.

Little change was reported in the pricing methods for online advertising expenditure, with the Direct Response pricing method comprising 26% in General Display advertising and CPM 74%. CPM pricing is based on a straight Cost per Thousand pricing methodology, sponsorship, or CPM-like Pricing, while direct response based pricing is based on a non-CPM display methodology. This may include any pay per click, pay per sale, pay per action or pay per lead.

If you’d like to know more about these figures, or how online advertising could improve your business, please contact us now.

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