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Frost & Sullivan: Online Video Outperforms All Other Segments of Online General Advertising

- Mobile Advertising on Smartphones to Reach $177 million by 2017

SYDNEY, Oct. 8, 2012 /PRNewswire/ -- The online general advertising market in Australia grew 21% from June 2011 to June 2012 to reach $768 million, and is expected to grow at a CAGR of 14% till 2017. Online video was the fastest growing type of online general advertising inventory, growing 58% during that period.

Based on Frost & Sullivan's report Australian Online General and Mobile Advertising Market 2012, published in October 2012 which includes a survey conducted with online advertisers in Australia, half of all respondents indicate that their online general advertising budget increased in 2012, with 39% indicating an increase of more than 25%.

The online video advertising market, at $86 million in 2012, is predicted to grow at a CAGR of 39% from 2012 to 2017. Its share of the online general advertising market will increase from 11% in 2012 to 30% in 2017, outperforming all other major online general advertising segments - online display, advertorials, integrated site content and sponsorships and EDM / e-newsletters.

Phil Harpur, Senior Research Manager, Australia & New Zealand ICT Practice, Frost & Sullivan said online general advertising expenditure funded from diversion of funds from traditional media advertising (such as newspapers, print directories, direct mail, TV, and radio) is still high. "This indicates that the migration from offline to online channels is a significant factor in the growth of the online advertising market. 59% of organisations indicated they had achieved measurable ROI from their online general advertising in 2012," he added.

"Social media is quickly becoming a popular advertising medium. Facebook has seen strong growth in advertising revenues and the proportion of Australian companies choosing to advertise on Facebook is growing strongly," Harpur shared.

Without incorporating social media into their marketing strategies, organisations acknowledge they risk failing to connect with a significant online audience. 43% of organisations use social media to monitor feedback on company performance or provide customer service and resolve customer issues.

The entry of ad exchanges into the Australian market is already leading to structural changes to the local online advertising eco-system. Over the last 12 months, agencies have bought a growing proportion of their ad spots directly on ad exchanges via Demand Side Platforms (DSPs) rather than via an ad network. This is particularly impacting ad networks who deal with second and third tier sites.

The mobile advertising market has gained strong momentum during the past year. Integration of mobile advertising inventory with other online and offline advertising products in an advertising campaign is recognised as crucial and is more widespread now than a year ago, especially in the retail sector. Growth during the 12 months to June 2012 was a very high 95%.  

Harpur also said that while Australian mobile carriers continue to explore mobile advertising as a revenue stream, their influence over the mobile ecosystem is subsiding as online publishers and specialist ad networks are becoming the preferred parties for agencies and brands to place their ad inventory.

"Global ad networks such as InMobi and AdMob are playing an increasingly important role in the local ecosystem, catering for Australians viewing more content on overseas sites," he elaborated.

"The mobile content market is becoming much more fragmented. With the addition of apps in the ecosystem there is a broader array of content options available, especially in the social media and gaming space. Local mobile advertising ad network specialists such as Big Mobile also continue to grow very strongly," Harpur explained.

Frost & Sullivan predicts strong growth over the next five years for the Australian mobile advertising market, with expenditure forecast to reach $177 million by 2017, with a CAGR of 46% between 2012 and 2017. Rising penetration of smartphones, and increasing amounts of mobile content available for advertising opportunities, along with growing acceptance of the mobile advertising medium by agencies and brands, will generate particularly strong growth in the mobile advertising market over the next two to three years.

Frost & Sullivan's report Australian Online General and Mobile Advertising Market 2012 forms a part of the Frost & Sullivan Australian Digital Media Research program. All research services included in this subscription provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants. For media queries and more information please send an e-mail with your contact details to Donna Jeremiah, Corporate Communications, at [email protected].

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