Australian online adspend to double

28 November 2014

SYDNEY: Australian online advertising expenditure is set to double over the next four years according to a new study, which highlights the growth of online video.

The report – Australian Online General and Mobile Advertising Market 2014 – from market researcher Frost & Sullivan forecast that spending will increase from the 2014 figure of A$1,150m to reach A$2,426 million in 2018, a compound annual growth rate of 16%.

And within this, it said online video was the fastest growing type of online general advertising inventory, with a growth rate of 60% during 2013/14. This now accounts for 17% of overall online general advertising expenditure.

"Sponsorships, integrated site content and in particular native advertising grew as online publishers increased their range of offerings," said Phil Harpur, Senior Research Manager, Frost & Sullivan Australia & New Zealand. "Also the affiliate online advertising market continues to grow strongly, especially in the online retail, finance and travel segments."

The mobile advertising market was also earmarked for rapid growth, with Frost & Sullivan predicting a compound annual growth rate of 27% between 2014 and 2019, by which time adspend through this channel would amount to A$900m.

Harpur said this would be driven by increased consumer media consumption on both smartphones and tablets and the improved targeting capabilities of online publishers and mobile ad networks.

But he warned that "mobile ad networks will need to continually evolve their business models, or their proprietary technology platforms will be superseded by the open nature and technology efficiencies of ad exchanges".

Another notable development is the increasing effectiveness of social media, as the report noted that 72% of Australian organisations that had advertised on social during the past year reported a positive ROI, compared to 63% in 2013.

Harpur added that "the slowest growing category was EDM/e-newsletters, which actually saw negative growth during 2013/14, as companies move towards more cost effective online advertising solutions with a higher return on investment (ROI)."

Data sourced from PR Newswire; additional content by Warc staff