Digital cats get cream as online ad spend continues swiftly upwards

The Interactive Advertising Bureau of New Zealand (IAB) and PricewaterhouseCoopers (PwC) have released the online advertising expenditure figures for Q2, 2010. And whaddya know, yet more massive growth, especially—and surprisingly—in the often-lambasted display advertising category.

As far as revenue goes, online advertising seemed to laugh in the face of the recession—and in the face of other media sectors—and that rise has only sped up, with the most recent April-June 2010 quarter showing that the cold, hard cash entrusted with publishers and search companies added up to $62.58m, an increase of $7.26m on the Q1, 2010 result.

The April-June 2010 quarter saw the highest increase in the last six months, at 19.23 percent year-on-year for the same quarter, proving solid growth in the total online advertising market. And the average total year-on-year increase for the last four quarters is 15 percent, which is well over what some were predicting.

Despite a few naysayers, display advertising overtook classifieds (by a sliver of $270k) for the first time ever with a massive 25.84 percent year-on-year increase and a rise of 38 percent from Q1 this year, a result that deviates from international trends, where paid search advertising, social media and mobile are the major growth sectors.

There was an interesting reversal of fortune in the display category, with two of the previously leading categories (travel and accommodation; and leisure, entertainment and media) both showing a decrease. However, sectors, like telecommunications bounced back showing a massive increase in proportion of spend to the display total compared to last quarter of 33 percent and government departments, services and communities taking the lead spot with 15 percent of the total Q2, 2010 display spend.

Michael Gregg, IAB chairman believes the overall ad spend figures are evidence, if any were needed, that the online sector has now transitioned from an emergent advertising choice to a mandatory mainstream medium.

“The industry has reached new maturity and is collectively focused on delivering strong traffic results, powerful branding opportunities and consistent measurement practices,” he says.

And Liz Fraser, IAB vice-chairman is obviously fairly happy with the positive results, which were better than expected, but did sound a note of caution.

“We are all smiling. You cannot complain about growth, particularly when other media have struggled. But, frankly, for digital, anything under double digits would have been disappointing, when you consider the upswing in business confidence this year, never mind the spending flurries that often precede June end-of-year close off. So there is a lot stacked in our favour.”

Alisa Higgins, IAB marketing manager says online ad spend growth is happening worldwide, with ZenithOptimedia revising its total ad spend forecast yet again and now saying online will rise 13.1 percent this year.

“We are certainly doing our bit to support the prediction,” she says.

Search & directories totalled $21.65m, up nine percent from Q1, 2010, while over the same period classifieds remained flat, though recording 19 percent year-on-year growth. Fraser says IABNZ expects to see an improvement next quarter, in line with the global macroeconomic recovery and renewed confidence in the employment market.

PricewaterhouseCoopers partner Chris Perree says: “Online advertising spend is steaming along, picking up momentum as each quarter progresses. We continue to report positive trends in the online advertising market in New Zealand. Contrasting total spend of each category to prior year reported figures highlights greater investment in the online advertising medium, in particular display advertising. We should keep an eye out on how the market spend in each category evolves to see if New Zealand trends towards similar proportions noted in more mature jurisdictions overseas.”

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