Online advertising industry growth declines in 2009, but rebound expected

The online advertising industry continued to perform well during the past 12 months even though traditional advertising markets struggled to repeat past successes, an industry leader has claimed.

The comments come as the Interactive Advertising Bureau reveals online advertising spending increased by just 9.4% during 2009, compared to the 27% rise during the previous year.

IAB chief executive Paul Fisher says the industry has continued to outplay the print and television markets, with companies opting to advertise online even while cutting back on traditional ad market spending.

In figures released today, the IAB said spending rose 9.4% during 2009 to $1.87 billion, down from last year’s 27% increase and from 34.5% in 2007.

“The GFC was without doubt the biggest impact on the industry in 2009, and were not immune to it at all,” Fisher says. “It did not have an impact on us, yes, but this wasn’t as big an impact as the other mediums experienced. We’ve managed to produce an exceptionally strong result.”

However, Fisher contrasts this against the result in the overall media advertising industry, which shrank by 8% during 2009.

Free to air television spending dropped 7.9% to $3.4 billion, newspaper advertising spending fell 16% to $3.46 billion while the capital city radio advertising market dropped 2.7% to $626 million.

“The biggest thing to realise from these figures is that the slowdown in the online industry is being compared to the days when we were recording 50% growth every year. And of course as the market grows to $2 billion, that’s going to slow.”

The biggest decline was in the online classified ads market, which fell by 2.3% to $429.8 million. Fisher says this is because this market is dominated by the property and recruitment industries, which both experienced declines during the financial crisis.

However, Fisher still says the overall result for online advertising was strong and that trend should continue over the year.

“The trend we are seeing is that market departments are still continuing to invest in online even when they are pulling out of traditional markets. We didn’t flatten out or go backwards. Companies are realising that even though they’ve trimmed budgets, they still have to invest in online.”

Other figures from the IAB show the search and directories market, which is dominated by Google, rose by an estimated 17% to $944 million. General display ad spending also increased by 7.1% to $498 million.

Fisher says he expects the industry to record 15% growth over the year surpassing $2 billion, with the search and directories market to grow by up to 20%.

“I think these figures show marketers are becoming more and more aware that consumers are spending more time online and interact with a variety of different formats of ads.”

“We’ve really got world leading online creative in this country, and it’s definitely showing up online, and more brand advertisers are realising they can do some really great things on the internet.”