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Australian online advertising reaches $9 billion, led by video and mobile

Australian digital advertising increased by 7.1 per cent year-on-year for the 2019 financial year, reaching $9 billion, the Interactive Advertising Bureau (IAB) has reported.

The 12th annual IAB Online Advertising Expenditure Report, prepared by PwC, finds that of the total spend: 

  • 45 per cent was attributed to Search and Directories; 
  • 37 per cent to General Display; and, 
  • the remaining 18 per cent to Classifieds.

The report reveals that whilst year on year growth has slowed (7.1 per cent compared to 11 per cent in 2018) reflecting the downturn in Australia’s overall advertising market, all online revenue categories have experienced growth. 

Search and Directories showed the strongest growth, increasing 8.0 per cent in the 12 months ended 30 June 2019, whilst growth for General Display and Classifieds stood at 7.4 per cent and 4.2 per cent annual growth respectively.

Figure 1: All online advertising categories experience growth in 2019 – Online advertising expenditure, FY19 compared to FY18.

Video and mobile continue to dominate investment

The report finds that video and mobile continue to gain share of digital investment. The shift from desktop to mobile continues apace with the total mobile advertising market, inclusive of search and display, increasing by $1 billion (or 28.4 per cent) to $4.6 billion. 

The IAB says that the introduction of 5G in the near future, faster data transfer speeds provide opportunity for future growth in this segment. However, Roy Morgan believes that the Australiaan population needs convincing of the benefits of 5G technology following the findings of a recent survey that fewer than half of the respondents would consider buying a 5G mobile phone. 

Video remains the fastest growing format of the $3.4 billion display market and now accounts for 44 per cent of total display. According to the report, total video advertising now stands at $1.5 billion (up from $1.3 billion in 2018) assisted by the growth of connected TV inventory and revenue.

The business sectors driving digital ad growth 

IAB Australia CEO Gai Le Roy said “We are seeing steady digital growth within a universally challenging advertising environment. When we look at some of the notable drivers of this growth, it’s clear that small and medium business investment in digital is growing at a higher rate than traditionally larger advertisers. 

“There are also some key category shifts. Automotive is again the largest advertiser category for display, but for the first time it is also the largest video advertising category – taking over from FMCG as their spend softens.”

Gai Le Roy, CEO, IAB Australia

She continued, “It is proven that a slower advertising market offers the brave marketer an opportunity to invest in order to take market share so it will be interesting to see how vertical category investment unfolds over the medium term.”

Chief Economist for PwC Australia Jeremy Thorpe, supported Gai Le Roy’s remarks commenting, “Australian businesses are operating in a challenging low-growth environment. Investment in marketing is an essential tool for businesses to grow their available market to achieve growth.”

Classified advertising down in June Quarter 2019

The report also sets out the June 2019 quarter data which shows total online spending is up 5 per cent year-on-year to reach $2.3 billion. 

  • Search and Directories experienced strong growth compared to the same quarter in the prior year growing by 10.3 per cent year-on-year to $1.16 billion; 
  • Display was up 4.3 per cent to $864 million and video up by a significant 16.7 per cent; and,  
  • Classifieds were down by 5.9 per cent with declining consumer confidence impacting listings.
Figure 2: Online advertising expenditure compared to prior comparative quarter (June quarter 2018).

With a share of 48 per cent, video represents the largest share of general display expenditure for the June 2019 quarter. This is followed by content, native and in-feed advertising at 34 per cent, and banner/standard display formats at 17 per cent. Video’s share of general display has grown steadily since September 2018.

Each segment has a component of mobile advertising expenditure with mobile advertising making up 68 per cent of total general display expenditure, an increase from 56 per cent in the June 2018 quarter.

The programmatic advertising impact 

Almost half (49 per cent) of general display advertising viewed on content publisher’s inventory was bought by media agencies via an insertion order or non-programmatic method, down from 58 per cent in Q1 2019. 

33 per cent of general display advertising was bought programmatically, an increase of 4 per cent on the previous quarter; taking share from media agencies.

With 47 per cent of content publishers’ video inventory being sold programmatically, video represents the general display type with the largest share sold programmatically either by real-time bidding via an exchange or private marketplace. Connected TV (CTV) contributes significantly to this with 53 per cent of content publishers’ CTV inventory being sold programmatically. 

Standard display and in-feed/native/content for content publishers are still primarily purchased by agencies at 44 per cent and 55 per cent respectively.

The two advertiser categories that increased their share of display spend for the quarter were Government at 6.7 per cent up from 5.1 per cent last year, driven by election spend; and, Travel which has gradually increased share over the last year to now represent 7.3 per cent of display up from 5.7 per cent last year. 

About the report 

Now in its 12th year of revenue reporting for the digital industry, the IAB Online Advertising Expenditure Report prepared by PwC is recognised as the industry standard for independent market level industry intelligence in Australia.  

The report compiled by PwC, solely for the use of the IAB, presents an unaudited aggregation of data provided by members of the IAB as well as estimates developed from publicly available information and other sources.

The full report is available for IAB Australia members.

About the Interactive Advertising Bureau

The IAB is the peak trade association for online advertising in Australia. As one of over 43 IAB offices globally, the role of the IAB is to support sustainable and diverse investment in digital advertising across all platforms in Australia.

 The IAB supports industry standards that promote trust, steps to reduce friction in the ad supply chain, and improvements to ad experiences for consumers, advertisers and publishers. 

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