Published on the 20/10/2010 | Written by Newsdesk

Australia’s online general advertising market grew in 2010 for the fifth year running and has shaken off the recession blues…

The latest figures show that the market increased by 11 percent to reach a value of $568 million.

Major publishers continued to account for the lion’s share of the market, claiming 61 percent of total revenues, down just one percentage point on the previous year.

The market appears to have regained its pre-recession optimism with significantly fewer survey respondents indicating a decrease in their online general budgets when compared to 2009 (eight percent in 2010 compared to 21 percent last year).

Frost & Sullivan’s study found that during the economic downturn, performance-based display advertising (CPC/CPA) was often seen as an “easy sell”, offering buyers both a cheaper option and the added security of a measurable return. With the economic pressure easing in 2010, there has beena strong swing back towards cost per thousand (CPM) based brand advertising, although CPC/CPA based advertising still showed solid growth.

Online video advertising
One of the major themes to appear in this year’s study is online video advertising. Better technology and graphics, as well as improved broadband speeds and bandwidth are aiding uptake of online video usage amongst consumers. This helped to drive strong demand in 2010 for online video advertising opportunities, resulting in an acute shortage of inventory with the online video spots offered by major publishers selling out very quickly.

Despite this increase in interest, the report notes that growth is coming off a relatively small base and there are still a number of factors holding back growth in this sector. These include a lack of quantity and variety of long form content, such as a wide range of television shows available on broadcast television, and lack of access to bandwidth speeds suitable for real-time viewing of long form content.

Online general advertising outlook
Just over half of all participants (52 percent) stated they plan to increase their 2011online general advertising budgets while 38 percent intend to increase search advertising budgets. These relatively high figures are a further indication of improved confidence in market conditions and point to the prospect of strong growth in the market in 2011.

Frost & Sullivan predicts that the value of Australia online general advertising market will increase to $877 million in 2015, at a compound annual growth rate (CAGR) of 9.1 percent. Growth rates are projected to decrease gradually as the market reaches a more advanced state of maturity. Market growth will be particularly strong for online video advertising over the next five years and this segment is expected to outperform all other major segments.

Mobile advertising
Australia’s mobile advertising market remains at a relatively nascent stage of development with mobile advertising campaigns typically being undertaken by larger advertisers and brands. Total revenues in this sector, excluding spending on application builds and Bluetooth services, reached $9.1 million in 2010, representing an increase of approximately 18 percent. Frost & Sullivan forecasts strong growth for the sector over the next five years with the market forecast to reach $76 million by 2015, with a CAGR from 2010 to 2015 of 46 percent.

The report notes that the main inhibitors to growth in mobile advertising include the need to reach a critical mass of smartphones; lack of rich media functionality; lack of locally available mobile optimised sites; and immaturity in mobile targeting ad serving functionality.

Social Media
The study found that social networking is increasingly being viewed as a long term strategic asset, unlike traditional media which are often viewed more as short term campaign based activities. The audience reach is significantly higher and potentially thousands of consumers can be reached with one online message.

The Frost & Sullivan survey revealed that more than half of Australian companies (53 percent) indicated that they had integrated social media applications into their online advertising during the past twelve months through activities such as the inclusion of a social media button or link to e-newsletters; broadcasting blog entries to email lists, and adding sign-up forms on social media sites.

The report suggests that social media is likely to be used as a complementary channel to traditional advertising and marketing channels. For example, email is still viewed as the number one tool to efficiently reach a target market and it can be complemented by social media to expand the target market dramatically.