The online advertising industry is still on its way to being the biggest segment locally and will overtake its nearest competitor, free-to-air TV, by more than a billion dollars by 2017, according to PwC.
The PwC Entertainment and Media Outlook has predicted the online ad market will grow at an average compound annual growth rate (CAGR) of 9.4% to $4.85 billion by 2017. This will make it, by far, the most formidable category in the industry. FTA TV will second at $3.57 billion. 2013 will be the first year online is set the take the highest revenue mantle from FTA TV.
Driving much of this growth will be consumers’ insatiable appetite for online video and mobile content. Mobile advertising is set for a compound annual growth rate of 25.7% to $244 million by 2017. The mobile market currently stands at $114 million and was a mere $6 million in 2008. Australia’s smartphone penetration was at 60% while tablet ownership has soared to 31% by the end of 2012, according to Nielsen’s Connected Consumers Report.
Online video advertising is set to grow at 44% CAGR by 2017 to $559 million. This year alone, it’s predicted to grow 50% to $135 million. Video advertising will fuel the growth of display (of which it’s part of) to $1.53 billion by 2017. Search will continue its upwards trajectory to $2.34 billion at a CAGR of 8.8%.
The classifieds market, however, is nearing saturation as the migration from print to online is almost complete. It’s set to increase 9.5% this year to $700 million but will stagnate and start to see small declines by 2016. PwC predicted it will hit $731 million by 2017 at a CAGR of 2.7%.
The rosy future for online advertising can credit changing consumer media behaviour. Australians’ data downloads increased 51% between 2011 and 2012 while 1.3 million new internet connections, be they fixed or mobile, transpired in the same period.
Mobile, in particular, will present more opportunities for brands with an AIMIA study indicating 42% of mobile owners in 2012 conducted e-commerce transactions through the device, compared to 25% in 2010.
On the consumer front, Australians will spend $9.74 billion on internet access by 2017, a CAGR of 7%. Money spent on mobile internet access will grow at a CAGR of 12.5% to $5.523 billion by 2017. 2014 will be the first year in which Australians will spend more on mobile internet access ($4.14 billion) compared to wired access (4.04 billion).
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