Once again, the digital folk are cackling with glee after online advertising expenditure figures for the third quarter of 2010 from the Interactive Advertising Bureau of New Zealand (IABNZ) and PricewaterhouseCoopers (PwC) showed that a total of $67.93m went through the gates, up $4.83m on the last quarter and up nearly 18 percent year on year.
“There is no stopping online growth,” says Liz Fraser, IABNZ chair and head of MSN NZ. “A whopping 17.66 percent increase year-on-year for the same quarter, with the largest category growth coming from display, up 24 percent on the same quarter as last year. Online advertising is tracking to overtake radio and magazines, based on the 2009 percentage share figures. Naturally in 2010, other media have also increased revenues year-on-year, so the race is on.”
After the ASA ad spend data was released earlier this year, the IAB claimed victory over magazines. Not any more, it seems. And, if these figures from Nielsen’s Adquest service for July to October show, online still has a long way to go, at less than half the level of magazine revenue and one sixth that of radio revenue.
IAB NZ general manager Alisa Higgins says the IAB uses a different methodology to calculate its revenue and it doesn’t believe the Nielsen data is accurate.
“That’s why we pay PWC to do this,” she says.
While big increases have been a regular feature of the online ad biz all around the world over the last few years, the amount of time consumers are spending online means the amount of money being spent there by advertisers doesn’t really stack up. Or, as Morgan Stanley analyst Mary Meeker says, it’s still completely out of whack. And this, she contests, leaves a US$50 billion hole waiting to be filled, which doesn’t seem to bode that well for traditional media that isn’t getting quite as many eyeballs or earholes but is still getting the money.
For example, 28 percent of the US population’s media time is spent online, but only 13 percent of ad budgets are directed there (and those figures are basically reversed for the print sector). In New Zealand, 83 percent of New Zealanders are now online, yet it accounts for just 10.5 percent of the total adspend, according to the ASA.
Higgins says this is happening everywhere and while some might see it as an indictment on the effectiveness of the medium, she sees it as evidence that there is still huge potential for growth in the sector.
Search & directories showed the largest quarter-on-quarter growth at 16.38 percent, while display showed the biggest year-on-year increase at 24.07 percent.
“Display advertising has really taken the lion’s share of uplift in advertising spend from last year,” says Laura Maxwell-Hansen, IABNZ vice-chair and general manager of Yahoo!Xtra. “It continues to be the go-to product for advertisers, with the largest range of products on offer and the ability to consistently deliver on advertising and business objectives of clients. No longer a dirty word, ‘banner ads’ have innovated and offer a far more sophisticated solution for advertisers. Results in rich-media, video and direct response campaigns are proving that audiences do respond to great creative and sound retail offers.”
When it comes to where advertisers are spending their money online the split is pretty even, with search & directories leading with a 37 percent share followed by display 32 percent and classifieds 31 percent.
Interestingly, Facebook advertising revenue, which is obviously a big growth area isn’t captured in IAB reports, but Higgins says the UK branch has developed an estimation methodology that she hopes to roll out in New Zealand at some stage.
“The channel spilt is an interesting one to watch. In Australia, search & directories makes up almost half of the total spend while in the UK it has a 60 percent share and in the US 47 percent,” she says.
The biggest display advertisers were Investment, Finance and Banking; Government departments, services and communities; and Travel and Accommodation. They accounted for almost 40 percent of total display dollars in Q3.
The highest spending advertiser categories in Australia were Finance followed by Motor Vehicles and Computers and Communications. Together these accounted for 43.5 percent of the total general ad expenditure. The top UK industry sectors for Display were Entertainment/Media; Finance and Consumer Goods.
“This trend reflects the accelerating shift in consumer behaviour towards the internet,” says PricewaterhouseCoopers partner Chris Perree. “The use of the internet as a means of marketing is maturing, especially as broadband penetration increases and faster broadband connections offer enriched media options and boost internet browsing time. From the advances in technology we are seeing new trends this year. With the release of the iPad and improved smartphone devices, companies are rolling out mobile websites to operate on these platforms. The likely growth in such devices will expand the overall online audience and drive online advertising. Furthermore, we are seeing social media gaining increasing viability amongst advertisers and publishers as a medium to connect with their target audience on a personal level.”