Having conquered cinema and outdoor, internet advertising is poised to surpass magazine and radio advertising revenues in the next two years according to a report by research group Frost & Sullivan.
The Australian online advertising market grew nearly 50% in 2005 with $605m in revenues and this is expected to increase significantly to more than $1.5bn by 2009, the researcher said.
Frost & Sullivan also predicts that Australian online advertising revenues will exceed magazine advertising (which accounts for around 7% or $700m of the total advertising market) in 2006 and radio advertising in 2007.
Online advertising revenue already surpass cinema and outdoor revenues.
The fastest growing online advertising sectors were, respectively, paid search, affiliate advertising, email advertising and streaming media advertising. The study found that revenues from online classifieds and online display advertising were on par and that paid search revenues overtook directory revenues for the first time in 2005.
Frost & Sullivan attribute the online industry’s growth to the rapid migration of eyeballs from traditional media to the internet and the increase in online media consumption across all demographics; strong uptake of broadband by Australian households; the evolution of wireless technologies such as 3G, which allows for digital advertising across both online (large screen) and mobile (small screen); and an increase in online spend by major advertisers and agencies.
The report, which also surveyed online advertisers, found most current advertisers are focused on returns, customer acquisition and branding.
Seventy-eight percent of advertisers surveyed indicated a “considerable” to “incremental effect” on company revenues from online advertising.
64% of advertisers surveyed indicated a “much lower” to “moderately lower” cost of customer acquisition through online advertising, with 56% indicated “positive effects to company brand” a main benefit of online advertising.
The greatest challenges faced by online advertisers were “tracking the effectiveness” of online campaigns; “increasing competition for media space” and “rising prices”.
