The current economic slowdown will not deter media spend in the online advertising sector over the next 12-24 months, according to the latest report from Frost & Sullivan, which forecasts continued solid growth bolstered by video and branded content executions.
Despite a dramatic slump in growth during the first half of 2008, Frost & Sullivan’s digital media senior research manager, Darryl Nelson, maintains that this was a temporary adjustment glitch.
The Online General Advertising Market report posits full year 2008 spend at $429.6 million with declines experienced in the site display sector as growth increases in next-generation brand and performance segments.
Nelson said that the online general advertising market continued to evolve both as a direct marketing and a brand medium with growth over the next two to four years driven by both strategies, with increasing technological and creative sophistication across the market.
The report nominates integrated content and video advertising as the key growth areas, both experiencing the fastest rise in the past 12 months.
“Strong creative innovation is beginning to emerge from integrated content executions, while video is especially set to enjoy explosive growth during the next two to four years,” Nelson said.
“The online general advertising market continues to enjoy solid growth and is not only well-placed to weather the current slowdown in overall media budgets but is set to benefit from its increasing cost-effectiveness in tight economic conditions,” he added.
The report forecasts that total online advertising market revenues will increase by 24% year-on-year in 2008, growing from $387 million to $481.4 million.
“Advertisers continue to see the increased lead generation and sales coming from the online channel, but are also now looking online to get more bang for their brand marketing buck,”Nelson said.
“The current tightening of marketing budgets overall strengthens their commitment to their digital strategies.”The market has also hit a competitive turning point, with share of total billings moving away from the major portals towards the ad network brokers and independent niche publishers.
Frost & Sullivan predicts that while total market growth will be solid during the next two to three years, there will also be considerable upheaval across media players as best practices begin to emerge for both direct marketing and brand strategies.
Over the past 12 months, major publishers have seen their combined share of revenues fall from 65% to 63%. Ninemsn remains the market leader for online general advertising revenue, capturing 21% market share in the 2008 financial year.
The research confirms that site display advertising continues to slide as a share of total revenue, dropping from 69% in FY2007 to 64% in FY2008.
Growth is now being dominated by next generation brand marketing and performance marketing such as email direct marketing and cost-per-click or cost-per-action campaigns.
Although a number of new industries are engaging in online advertising, spending continues to be dominated by traditional advertisers including the banking, finance and insurance industry, the automotive sector and communications industries.
Together, these segments accounted for 51% of online advertising revenues in the 2008 .
