By Celia Johnson on 12 October 20100

Australia’s online general advertising market will increase to $877m over the next five years, spurred by greater investment in online video ads and mobile phone advertising.
At present, the general online advertising market is valued at $568m, a growth of 11% in 2010, according to research company Frost & Sullivan. This figure however does not include online search, directories or classifieds.

The company’s Australian Online General and Mobile Advertising Market 2010 report estimates advertising spend will grow at a compound annual growth rate of 9.1% to be worth $877m in 2015.
Growth is said to be led by online video advertising over the next five years with the segment said to outperform all other major categories.

While the report noted that online video advertising was boosted this year in line with increased consumer demand for online video content, there remain a number of factors holding back growth in the sector. A lack of quantity and variety of long-form content such as a wide range of TV shows available on broadcast television, and a lack of access to broadband speeds suitable for real-time viewing of long-form content were cited as the major drawbacks for the sector’s ongoing growth.

Over half of participants surveyed (52%) indicated they plan to increase their online general advertising budgets next year, while 38% intend to increase search advertising budgets.
Phil Harpur, senior research manager, ICT Practice, at Frost & Sullivan, said: “2010 was a strong year for online advertising with the market returning to form. In the next few years, online video advertising is going to be an important force but some of its heat will dissipate as more inventory comes onto the market. In the traditional areas of online display, EDM [electronic direct marketing] and e-newsletters, and integrated site content, growth should remain strong in the short term. However, market maturity will eventually see revenues gradually declining.”

Mobile advertising is also set to boom in the next five years, albeit off a low base, with Frost & Sullivan estimating the sector to be worth $76m by 2015, up from $9.1m this year. The report noted that inhibitors to mobile growth include the need to reach a critical mass of smartphones, a lack of rich media functionality, a lack of locally available mobile optimized sites and immaturity in mobile targeting ad serving functionality.

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