IAB figures show online ad market reached $2.45 billion

By By Wenlei Ma | 15 August 2011

Online advertising hit $2.45 billion in the year ending 30 June, an increase of 20%, however retail and FMCG brands still lag in taking advantage of the fast-growing channel.

The Interactive Advertising Bureau Expenditure Report, compiled by PricewaterhouseCoopers, reported a $412 million increase on online advertising expenditure year on year

FMCG brands accounted for only 5.5% of online expenditure and actually recorded a decline of 0.5%.

IAB chief executive, Paul Fisher, said the slump in FMCG online advertising meant the sector invested less than $34 million, or 5.5%, of the total investment in display advertising for the financial year.

Fisher said the results substantially lag the UK, where in the same period the consumer packaged goods sector claimed 13% of all display advertising spend and the total spend by the FMCG sector grew 30% year on year.

“FMCG advertisers are missing exceptional opportunities to increase their TV reach and frequency through the addition of online video advertising, and also more efficiently allocate their print advertising expenditure across print and online.”

The report showed search & directories advertising lead the pack, accounting for 51.5% of the expenditure at $1.26 billion, and increased 23% year-on-year. General display advertising accounted for 24.9% at $612 million, an increase of 12%. Classifieds took 23.6% at $580 million, an increase of 23%.

For the year, advertisers from the finance, motor vehicles, computers and communications industries were big spenders in the general display advertising, and accounted for 41.4% of general advertising expenditure. In classifieds, real estate, recruitment and automotive led the category.

While retail saw an increase in online advertising spend, the sector still only accounts for 6% of total expenditure.

Fisher said: “Despite, or perhaps because of the many reported challenges facing the industry, the retail sector has shown strong growth in online advertising in the past year.

"Surprisingly though retail sits at just 6% of all display advertising. Online advertising offers retailers a highly measurable return on investment and so we believe there is enormous opportunity for the industry to more efficiently spend their advertising budgets online, especially in the lead up to Christmas.” 

Fisher also identified the government as a sector who's under-spending online.

"Government expenditure in online advertising also continues to disappoint. With increasingly hard to reach demographics and the many communications challenges faced by the Federal and State Governments, there needs to be an increased investment in interactive advertising.”

Online video advertising, saw an increase of 53% year on year at $38.8 million.

PricewaterhouseCoopers partner, Maria Martin, said: “The growth in video advertising is exciting as it offers a better experience for the digitally empowered consumer and improved customer engagement for the advertiser."

"Continued increases in video advertising will also leverage the expected growth in consumer  connectivity, with the 2011 PwC Entertainment and Media forecast predicting by 2015 at least 95 percent broadband penetration and over 80 percent mobile penetration.”

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