Online advertising in NZ up 20 percent year-on-year

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Online advertising in New Zealand up 20 percent year-on-year in Q1, 2011

All online channels experience double digit growth year-on-year

UNDER EMBRAGO UNTIL MIDDAY TUESDAY 17TH MAY 2011

Total online advertising spend in Q1, 2011 was $68.12 million up 20% year-on-year.

All channels experienced growth year-on-year:

• Search & Directories: up 29.81%

• Display: up 22.24%

• Classifieds: up 10.15%.

Traditionally, Q1 is the weakest quarter and with factors like the Christchurch Earthquake affecting businesses everywhere in New Zealand it’s not surprising this quarter was no different. However, Classifieds, normally one of the weakest channels has experienced 6.82% growth on Q4, 2010.

Liz Fraser, IABNZ Chair & General Manager MSN New Zealand says, “For the first time, IABNZ requested revenue submissions to include a breakdown of video online advertising and e-mail advertising. In the past, these figures were included within the Display figure. Video online advertising came in at 9.62% and e-mail advertising at 1.2%.

Publishers know that video advertising is growing, but we didn’t know how much higher the percentage would be compared to Australia and the UK, where both markets are at 5.7% of total Display revenue. However, in the US, video online advertising is 14.2% of their Display revenue. Advertisers are continuing to look for more cost-effective formats and video online advertising is one where they can enhance or replace their television schedules.”

The graph above shows the total amount for Display advertising in Q1, 2011 was $19.76m. Email based advertising made up 1.20% ($236,730) and video based advertising comprised 9.62% ($1.9m) of the total Display advertising expenditure.

Search & Directories is still the channel leader with a 38% share of total ad dollars in Q1, 2011. Display advertising has seen the biggest drop of 18.51% from the last quarter (Q4, 2010). The following were the dominant industries using Display advertising:

• Investment, Finance & Banking - 13.67%

• Government departments, Services & Communities - 11.37%

• Travel and Accommodation - 10.93%

• Leisure, Entertainment and Media - 9.69%.

“Four main industry verticals Investment, Finance & Banking, Government departments, Services & Communities, Travel and Accommodation and Leisure, Entertainment and Media continue to represent close to 50% of all online display advertising spend.

These industries recognized early-on that audiences had moved to online environments and now have sound campaign knowledge that they use to influence behaviour change, move brand preferences and convert sales.

Snapping at their heels though are the big movers for 2011 (compared to the same period in 2010) – Insurance, Computers, Real Estate and Retail.

Insurance has more than doubled their growth, while Computers, Real Estate and Retail are all showing more than 70% growth year-on-year.

The breadth of industry advertisers clearly shows that online is now firmly established as a mainstay on media schedules and is a must have.” says Laura Maxwell-Hansen, General Manager, Yahoo!Xtra and IABNZ Vice Chair.

“So far 2011 has been a year of ups and downs for the online publishing industry. Even before the February earthquake, it was apparent that the economy was weaker in the second half of 2010 and early 2011.

On the up side, a recent IAB member survey showed most believe we will experience double digit growth with estimates ranging between 20-25% for the total year and between 3-6% for next quarter.” says Alisa Higgins, General Manager, IAB New Zealand.

“The landscape of our economy has changed over recent months, shaped by the continuing global financial situation and the natural disasters we have witnessed. In particular the Christchurch earthquake and the impact it has on businesses. No one is immune to the effects and online advertising is no exception. Yet, despite the challenging times, it’s evident the online industry continues to build from strength to strength. The strong double digit growth reported this quarter when comparing to Q1, 2010 continues to promote the benefits this channel of advertising has to offer.

The positive trends visible in the online publishing industry prove the online space is resilient. Social media provides a channel to effectively communicate to the world and is providing engaging content such as online video, which currently has a 9.62% share of the Display advertising expenditure. This highlights the potential online advertising has to offer to all New Zealand organisations, when it comes to spreading the word locally or beyond our shores.

The figures reported this quarter are consistent with our expectations, a slight dip following the Q4 period. Yet, looking at the growth in the online advertising markets in Australia and the United States, the online advertising industry continues to shine.” says Chris Perree, Partner, PwC.

ENDS

[Full release with charts (DOC)]

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