Simon Canning | August 11, 2008
THE internet advertising industry has defied a slowing economy to break the $1.5 billion barrier for the first time.
Advertising spending online grew by 27 per cent to June 2008, according to the Internet Advertising Bureau's latest online advertising expenditure report.Search and directories still dominate, up 34 per cent on last year to $706 million.
General display advertising also enjoyed strong growth, up 23 per cent to $411 million.
Classifieds grew by 21 per cent to $407 million.
IAB chief executive Paul Fisher said the numbers showed confidence in the sector.
March data revealed that for the first time Australians spent more time online than watching TV, with people spending an average of 13.7 hours a week online compared to 13.3 hours watching TV.
But Mr Fisher said more needed to be done to get a broader range of industries using the internet as a regular media channel.
"The continued growth of online advertising demonstrates a growing confidence in the medium, and importantly shows the increasing inclusion of online advertising in marketers' strategic plans," Mr Fisher said.
"All segments -- search, display and classifieds -- continue to grow significantly, and the combined total surpassing $1.5 billion for the first time is testament to the strength of the industry here in Australia.
"To achieve a growth rate of 27 per cent year on year indicates the growing importance of online advertising in the media mix.
"There is still much work to be done, however, to educate and inform key industries yet to fully embrace online advertising -- in particular fast moving consumer goods, retail and government -- on the effectiveness online advertising plays not only in direct response, but also in branding."
Mr Fisher said that despite the bleak economic outlook, online advertising had grown to such a level that advertisers could confidently invest in it.
"Advertisers can continue to invest confidently in online advertising knowing their target audience is spending more of their time online, and that online advertising offers a cost-effective platform to reach and engage with them," Mr Fisher said.
While the industry might still be courting government and fast moving consumer goods, other sectors continued to show a real taste for online.
The finance sector was the largest user of display advertising in 2008, with recruitment dominating the classifieds sector.
The report, compiled for IAB by PriceWaterhouseCoopers, showed the rate of growth slowing as the market became matured. It also noted that some sectors had actually pulled back on their advertising.
PwC lead partner for technology, entertainment and media, David Wiadrowski, said there was little doubt the extraordinary pace of growth seen in 2006 and 2007 could not be kept up.
"With advertising expenditure exceeding $1.5 billion over a 12 month period for the first time, strong growth can be seen across all markets segments," Mr Wiadrowski said.
"The industry categories within general display show growth in all categories with the exception of media and real estate, which actually decreased their general display advertising expenditure."