Online gobbles 1/3 of ad dollars despite softer quarter

One in three ad dollars are now going straight to digital with the online advertising market growing 17.1% year on year to $1.067 billion, the latest IAB/PWC Online Advertising Expenditure report shows.

However, as expected, overall online advertising dollars fell by 1.9% compared to the previous December quarter with search and directories the only area of online advertising that saw an increase this March quarter.

“The March quarter is always slightly softer than the strong December quarter, however, it was pleasing to see strong year on year results," Gai Le Roy, IAB’s director of research, said.

Search and directories still makes up the biggest portion of online advertising (54.4%), with an expenditure of $580.4 million.

General display followed next with an expenditure of 28.2% with classifieds after at 17.3% however these areas fell this quarter by 8% and 2.3% respectively.

Sub-components of the general display advertising for this quarter are shown below.

Infographic obatined from the executive summary of the report.

Even though retail rose to a general display industry category share of 9.3% this quarter, Alice Manners, CEO of the IAB, believes it’s still behind the other markets.

“Retail spend was about 9.3% of display and that is one category in the past two years that has seen constant growth,” she said.

“It’s probably slightly behind some of the other mature markets but it’s growing quickly.”

Manners also believes advertising dollars will be upped in mobile once a measurement system is put into place.

“What will make a big difference will be when we are able to measure mobile advertising in the same way that we measure online advertising. Once we can do that effectively we’ll see more dollars going into mobile,” she said.

Mobile advertising made up 15.3% of total online advertising expenditure , compared to 14.3% in the December quarter.

Looking towards other industry categories, finance dropped from 13% this time last year to 10.7% in the current quarter report.

In terms of the general display expenditure category shares, motor vehicle remains top with a share of 20.7%, up 0.3% from this time last year, with real estate grabbing a share of 10.4%, coming in third behind motor vehicles (20.7%) and finance (10.7%).

Infographic obatined from the executive summary of the report.

“We saw real estate again continuing to be strong and that’s obviously off the back of a strong property sector, but still it’s a record high,” Manners said.

The December quarter in 2013 saw online advertising push past free-to-air advertising for the first time, and even though digital ad dollars continues to increase, Manners said digital is never looked at in isolation.

“Everyone is looking at their extended platforms,” she said.

“I think free-to-air [TV] are coming out with their offering in the next couple of weeks. Obviously consumer usage is changing and will continue to change, but we don’t ever look at digital in isolation. It’s a complementary medium.”

Against the rest of the world, Manners believes Australia is tracking well.

“Australia is in a really strong position,” she said.

“We’ve had continual double digit growth year on year which is fantastic and I think what’s interesting now is watching how it evolves into areas such as mobile and video.”

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