Demand for Website Banners To Significantly Decline as Advertisers Turn to Online Video
Announcement posted by Frost & Sullivan 10 Oct 2011
Growth will see Australia's online general advertising market value rise to $1.051 billion by 2016
Sydney, 10 October 2011 -The face of Australia's online general advertising market will undergo a marked change in the coming five years as demand for mature inventory segments including online display, advertorials, integrated site content, sponsorships and electronic direct mail/electronic newsletters declines. The use of simple banners will reduce significantly and in their place, Frost & Sullivan predicts very strong growth rates for online video advertising and an increasing proportion of rich media through to 2016.
The Australian Online General and Mobile Advertising Market Report 2011 released today by Frost & Sullivan shows that the online general advertising market grew solidly in the 12 months to June 2011, rising by 11.9 percent to reach a value of $635 million (excluding mobile advertising). This rate of growth was slightly higher than the year prior, when the market was influenced by the lingering impact of the global financial crisis. Over the next five years the market is forecast to grow at a compound annual growth rate of 10.6 percent, reaching a value of $1.051 billion in 2016.
The study notes that in a survey conducted with 240 senior management level executives in July 2011 just over half of advertisers stated they increased their online general advertising budget during 2010/11. The budget changes are highly correlated to the size of organisation, with larger organisations more likely to have increased expenditure during the prior 12 months. The largest growth rates during this period were experienced in the industry verticals of Finance and Insurance, and Fast Moving Consumer Goods/Retail.
The major multi-sector publishers such as NineMSN, Fairfax Media, Yahoo!7 and News Digital Media continue to retain the largest slice of the online general advertising revenue pie, however the growth of social media advertising has been exceptionally high. Social media publishers now account for seven percent of the total market. By far the dominant player in this segment is Facebook which holds approximately six percent of the overall online general advertising market share. YouTube accounts for approximately four percent of revenues, largely due the growth of video advertising.
Mobile Advertising
Mobile advertising expenditure rose steadily during the last 12 months but growth rates have remained below market expectations as the mobile advertising market has not yet gained the high level of traction that was anticipated a few years ago. Frost & Sullivan notes that the mobile market has yet to gain enough momentum to reach the tipping point where media agencies will begin to view it as a mainstream alternative to online and off-line channels. The major restraints that have inhibited adoption of mobile advertising to date include a lack of locally available mobile sites, under-utilisation of consumer targeting, lack of rich media ad serving functionality, insufficient industry and ad agency awareness and fragmentation of mobile operating systems.
However, many of these issues are now being outweighed by the positive drivers for mobile advertising including rising smartphone penetration, increased data caps on standard mobile plans, increasing amounts of mobile content and a growing range of mobile advertising inventory. As a result, more than 60 percent of advertisers surveyed by Frost & Sullivan say they plan to increase their mobile advertising budgets in 2012.
Excluding spending on application builds and Bluetooth services, the mobile advertising market, grew by approximately 26 percent during 2010/11 and was valued at $13.9 million. The market is expected to grow at a compound annual rate of 43 percent over the next five years, leading to a total market value of $82 million by 2016. Peak growth is forecast for 2013/14, by which time the remaining major inhibitors to market adoption will be overcome.
Phil Harpur, Senior Research Manager Australia/New Zealand – ICT, Frost & Sullivan, says, “The two big trends in advertising over the next five years will be a rapid growth in video advertising driven by an increased presence in online video streaming and significant growth in mobile advertising. Right now Australian mobile advertising expenditure is low compared to the UK and the USA, despite the fact that Australia’s smartphone penetration is now roughly on par with those markets, but this is already starting to change and we anticipate rapid growth as mobile advertising, driven by further adoption of smartphones and strong growth in Tablet PCs, gains more acceptance amongst advertising agencies as a crucial part of the overall advertising mix”.
About The Australian Online General and Mobile Advertising Market Report 2011
The Australian Online General and Mobile Advertising Market Report 2011 was prepared following more than thirty executive interviews with major publisher groups, independent publishers,
advertising network brokers, and major media agencies. Source data also included an advertiser survey involving more than 240 senior management level executives with control or insight into the business marketing budget and strategy.
Frost & Sullivan's Online General and Mobile Advertising Market Report 2011 forms part of the Frost & Sullivan’s Digital Media Research Program 2011. All research services included in subscriptions provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants. Interviews with the press are available.
About Frost & Sullivan
Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best-in-class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best-practice models to drive the generation, evaluation, and implementation of powerful growth strategies. Frost & Sullivan leverages 50 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from more than 40 offices on six continents. To join our Growth Partnership, please visit http://www.frost.com on six continents.
The Australian Online General and Mobile Advertising Market Report 2011 released today by Frost & Sullivan shows that the online general advertising market grew solidly in the 12 months to June 2011, rising by 11.9 percent to reach a value of $635 million (excluding mobile advertising). This rate of growth was slightly higher than the year prior, when the market was influenced by the lingering impact of the global financial crisis. Over the next five years the market is forecast to grow at a compound annual growth rate of 10.6 percent, reaching a value of $1.051 billion in 2016.
The study notes that in a survey conducted with 240 senior management level executives in July 2011 just over half of advertisers stated they increased their online general advertising budget during 2010/11. The budget changes are highly correlated to the size of organisation, with larger organisations more likely to have increased expenditure during the prior 12 months. The largest growth rates during this period were experienced in the industry verticals of Finance and Insurance, and Fast Moving Consumer Goods/Retail.
The major multi-sector publishers such as NineMSN, Fairfax Media, Yahoo!7 and News Digital Media continue to retain the largest slice of the online general advertising revenue pie, however the growth of social media advertising has been exceptionally high. Social media publishers now account for seven percent of the total market. By far the dominant player in this segment is Facebook which holds approximately six percent of the overall online general advertising market share. YouTube accounts for approximately four percent of revenues, largely due the growth of video advertising.
Mobile Advertising
Mobile advertising expenditure rose steadily during the last 12 months but growth rates have remained below market expectations as the mobile advertising market has not yet gained the high level of traction that was anticipated a few years ago. Frost & Sullivan notes that the mobile market has yet to gain enough momentum to reach the tipping point where media agencies will begin to view it as a mainstream alternative to online and off-line channels. The major restraints that have inhibited adoption of mobile advertising to date include a lack of locally available mobile sites, under-utilisation of consumer targeting, lack of rich media ad serving functionality, insufficient industry and ad agency awareness and fragmentation of mobile operating systems.
However, many of these issues are now being outweighed by the positive drivers for mobile advertising including rising smartphone penetration, increased data caps on standard mobile plans, increasing amounts of mobile content and a growing range of mobile advertising inventory. As a result, more than 60 percent of advertisers surveyed by Frost & Sullivan say they plan to increase their mobile advertising budgets in 2012.
Excluding spending on application builds and Bluetooth services, the mobile advertising market, grew by approximately 26 percent during 2010/11 and was valued at $13.9 million. The market is expected to grow at a compound annual rate of 43 percent over the next five years, leading to a total market value of $82 million by 2016. Peak growth is forecast for 2013/14, by which time the remaining major inhibitors to market adoption will be overcome.
Phil Harpur, Senior Research Manager Australia/New Zealand – ICT, Frost & Sullivan, says, “The two big trends in advertising over the next five years will be a rapid growth in video advertising driven by an increased presence in online video streaming and significant growth in mobile advertising. Right now Australian mobile advertising expenditure is low compared to the UK and the USA, despite the fact that Australia’s smartphone penetration is now roughly on par with those markets, but this is already starting to change and we anticipate rapid growth as mobile advertising, driven by further adoption of smartphones and strong growth in Tablet PCs, gains more acceptance amongst advertising agencies as a crucial part of the overall advertising mix”.
About The Australian Online General and Mobile Advertising Market Report 2011
The Australian Online General and Mobile Advertising Market Report 2011 was prepared following more than thirty executive interviews with major publisher groups, independent publishers,
advertising network brokers, and major media agencies. Source data also included an advertiser survey involving more than 240 senior management level executives with control or insight into the business marketing budget and strategy.
Frost & Sullivan's Online General and Mobile Advertising Market Report 2011 forms part of the Frost & Sullivan’s Digital Media Research Program 2011. All research services included in subscriptions provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants. Interviews with the press are available.
About Frost & Sullivan
Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best-in-class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best-practice models to drive the generation, evaluation, and implementation of powerful growth strategies. Frost & Sullivan leverages 50 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from more than 40 offices on six continents. To join our Growth Partnership, please visit http://www.frost.com on six continents.