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The online advertising market is forging ahead, continuing to gain revenues at the expense of the traditional print media, TV and radio, and with a significant amount of the online ad dollars directed to video and mobile advertising.

As revealed in latest report from market analysts firm, Frost & Sullivan, the online general advertising market in Australia grew by 21 percent to $768 million in the 12 months to the end of June this year, with online video attracting the lions’ share of the dollars with a growth of 58 percent in that period.

The online video advertising market in Australia is currently standing at $86 million and is predicted to forge further ahead with a compound annual growth rate (CAGR) of 39 percent each year until 2017.

And, video advertising’s share of the online general advertising  market, according to Frost & Sullivan,  will  increase  from  11 percent  this year to  30 percent  in 2017, outperforming  all other major online general advertising segments – online display,  advertorials,  integrated site content and sponsorships and EDM/e-newsletters.

While video is currently attracting a big share of the advertising dollars, the mobile advertising market is picking up as well, gaining strong momentum during the past year.  

Now, integration  of  mobile  advertising inventory with other online and offline  advertising products  in an advertising campaign is recognised as “crucial and  is  more  widespread  now  than a year ago,” especially in the retail  sector.  

Frost & Sullivan puts growth at a very high 95 percent for mobile advertising during the 12 months to June this year, with predictions for significant growth in the years to come.  

Over the next five years for the Australian mobile advertising market is predicted to record strong growth, with expenditure forecast to reach $177 million by 2017, and with a CAGR of 46 percent over that period.

The prediction of particularly strong growth in the mobile advertising market over the next two to three years is attributed to the rising penetration of  smartphones, and  increasing  amounts  of  mobile content available  for  advertising opportunities, along with growing acceptance of the  mobile  advertising  medium  by  agencies  and  brands.

According to Phil Harpur, Senior Research Manager, Australia & New Zealand ICT Practice at Frost & Sullivan, while Australian mobile carriers continue to explore mobile advertising as a revenue stream, their “influence over the mobile ecosystem is subsiding as online publishers and specialist ad networks are becoming the preferred parties for agencies and brands to place their ad inventory.”

“Global ad networks such as InMobi and AdMob are playing an increasingly important role in the local ecosystem, catering for Australians viewing more content on overseas sites.’’

Harpur also makes the point that the mobile content market in Australia is becoming much more fragmented. “With the addition of apps in the ecosystem there is a broader array of content options available, especially in the social media and gaming space.

“Local mobile advertising ad network specialists such as Big Mobile also continue to grow very strongly,” Harpur said.

Commenting on the broader online general advertising market, Harpur says that online general advertising expenditure “funded from diversion of funds from traditional media advertising, such as newspapers, print directories, direct mail, TV, and radio, is still high.”

“This indicates  that  the  migration  from  offline  to  online  channels  is  a significant  factor in the growth of the online advertising market. 59% of organisations indicated they had achieved measurable ROI from their online general advertising in 2012.”

On the social media market, Harpur says that social media is “quickly becoming a popular advertising medium,” and he adds, “Facebook has seen strong growth in advertising revenues and the proportion of Australian companies choosing to advertise on Facebook is growing strongly.”

Frost & Sullivan also observes that without incorporating social media into their marketing strategies, organisations acknowledge they risk “failing to connect with a significant online audience.”

And, according to Harpur, forty-three percent of organisations use social media to monitor feedback on company performance or provide customer service and resolve customerissues.

The  entry of ad exchanges into the Australian market, reports Frost & Sullivan, is already leading to structural changes to the local online advertising eco-system, with Harpur noting that over last 12 months,  agencies  have  bought  a  growing  proportion  of their ads spots directly  on  ad exchanges directly via Demand Side Platforms (DSPs) rather than via an ad network.

“This is particularly impacting ad networks who deal with second and third tier sites,” Harpur says.

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Peter Dinham

 

Peter Dinham is a co-founder of iTWire and a 35-year veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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