Who Is Really Getting The Benefit Of Online Ad Growth?

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Reading between the lines on the the latest IAB/PWC data on online ad growth, Andrew Birmingham from Which-50 says you’ll see that the rising tide isn’t lifting all boats.

Google and Facebook are very close to a clear majority of the total market for online ads and mobile and video continue to surge (although video less so) in the latest IAB ad growth report.But according to industry intel blog Which-50, although the overall picture for online ad growth is bright, there are clear winners and losers, even in the online classified sector.

For the quarter ending September 30, 2014, online advertising in Australia reached $1.2 billion, up 16 per cent on last year. Search remains the dominant category pulling in 49 per cent of the total spend – the vast bulk of it going to Google.

Display continues to enjoy its renaissance, growing 22.4 per cent year on year although but Which-50 questions just how much of that is actually flowing to traditional media companies like News and Fairfax as opposed to the pure plays like Facebook and REA.

Despite the headline from the IAB about the robust classified category – which IAB CEO Alice Manners described as “a great story for Australia” the reality is more sanguine. It is certainly a great story for Realestate.com.au which massively grew its listing revenues during the last financial year and which is also having strong wins on the display front.

However, as Which-50 points out, the year-end financial results from Carsales and Seek (Domestic) – who along with Realestate.com.au represent the bulk of the category – suggests neither is likely to be matching the total Australian online classified category growth.

Seek’s domestic revenues grew three percent last financial year and Carsales came in at nine per cent – both a long way short of the 22.8 per cent increase the whole category experienced in the first quarter of this financial year. Which-50 does point out that their international operations are outperforming domestic, and Carsales is doing well from its data and research business.

Mobile and video front which were up 85 and 42 per cent respectively (although video only just managed a Q on Q increase.)

According to the IAB, “Mobile advertising yet again saw dramatic growth, reaching $205 million for the quarter, up 85 percent year on year to reach 17.4 percent of the total online advertising market and 26 percent of general display – up from 22.5 percent from last quarter. Fifty-five percent of total mobile advertising expenditure was attributed to search, with 45 percent spent on general display. Device category shares for general display were 56 percent for Smartphone and 44 percent for tablets, representing an increase in Smartphone’ share of mobile advertising over time.”

Meanwhile Video advertising for the quarter hit $62.3 million, up 1.4 percent on the prior quarter and a year-on-year increase of 41.8 percent. “It now accounts for over 17 percent of general display advertising expenditure during the quarter. FMCG advertisers were again the single biggest investors in online video advertising with 15 percent of total video revenue coming from this sector. Auto advertisers also increased their video spend to 12.7 percent, making them the second largest advertiser category for video.”

And as always the usual caveat applies to the research: Google, which dominates the biggest category — search — and the total market generally, does not provide its numbers and neither does Facebook.

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