Online advertising recovers from blip

Australia’s total online advertising market revenues are forecast to increase by 24% year-on-year in 2008, growing to $481.4 million from $387 million as budgets continue to shift from traditional media to online.

Australia’s total online advertising market revenues are forecast to increase by 24% year-on-year in 2008, growing to $481.4 million from $387 million as budgets continue to shift from traditional media to online.

New research from research firm Frost & Sullivan also shows the economic downturn and the subsequent cutback in media budgets is actually assisting the online market as advertisers increasingly seek cost effectiveness in tight economic conditions.

However online advertising is recovering from a blip, plummeting in the first half of 2008, with growth of less than 1% from the second half of 2007.

Solid growth has returned and is expected to continue strongly throughout 2009, according to Frost & Sullivan’s latest digital media advertising research Australia Online General Advertising Market 2008-2012.

“Advertisers continue to see the increased lead generation and sales coming from the online channel, but are also now looking online to get more bang for their brand marketing buck,” says Darryl Nelson, Frost & Sullivan senior research manager, digital media, Asia Pacific. “The current tightening of marketing budgets overall strengthens their commitment to their digital strategies.”

Competition for marketing dollars also increased significantly in the past year. Some major sites continued to lose market share to network players and independent niche publishers, which have delivered additional advertising inventory.

Nelson says that while total market growth will be solid during the next two to three years, there will also be considerable upheaval across media players as best practices begin to emerge for both direct marketing and brand strategies.

Site display advertising continues to decline as a share of total revenue, dropping from 69% in fiscal 2007 to 64% in fiscal 2008, the study found. Instead, growth is being dominated by next-generation brand marketing and performance marketing such as email direct marketing and cost-per-click or cost-per-action campaigns.

One new trend is the adoption of integrated content and video, which is expected to achieve very high growth in the next two to four years.

Spending continues to be dominated by traditional advertisers including the banking, finance and insurance industry, the automotive sector and communications industries. These segments account for 51% of online advertising revenues in the 2008 financial year.

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