Overview of Online Advertising in Australia

May 25, 2008 · Filed Under Online Advertising Australia · 4 Comments 

According to the International Telecommunications Union, Australia has over 15 million internet users (close to 75% of the population).

According to Nielsen online 8,987,000 Australian internet users searched Google in the month of April 2008. It’s also interesting to note that, according to the same source, visitors on average will spend just 52 seconds on a web page.

In Australia in 2007, $1.346 billion was spent on online advertising in Australia. This was an increase of 34.5% on 2006 expenditure (source IAB).

The IAB groups online advertising into 3 categories – the break-up is below:

  • General Display – $367 million (27.3%)
  • Classifieds – $356.75 million (26.5%)
  • Search and Directories – (46.2%)

In 2007 the fastest growing sector was search and directories – growing 56%.

Search

Search advertising is advertising that is placed on search engines like Google, Yahoo!, Ninemsn (which uses Yahoo! advertising) and Sensis. The idea is that when a user types in a search term that matches a term that an advertiser has targeted, their ad will display.

It generally consists of a very short advertisement of just four lines. The heading (around 25 characters long), two lines of text (around 35 characters long each line) and a display URL (the destination you will arrive at if you click on the ad).

Advertisers bid an amount that they are prepared to pay for each click. In the case of Google AdWords, the amount an advertiser ends up paying per click will depend on the “quality score” of the advertisement, how relevant the ad is to the search term, the relevance of the page the visitor lands on, the amount of clicks it receives (in proportion to the number of times it is displayed), and also the amount of competition.

This model of advertising is called cost per click or pay per click (CPC or PPC for short), because the advertiser only pays when someone clicks on their ad. Depending on the industry, clicks can range from a few cents to tens of dollars per click.

Contextual Advertising

These types of ads take a similar, although not necessarily identical, format to search ads. These ads are typically displayed on a page because they are relevant to the content on the page, not because someone has necessarily searched for that term. These ads can be text or images. Pricing can be CPC, or CPM (which is the cost per 1,000 impressions).

Directory Advertising

Directory advertising consists of online business directories – the most popular ones being Yellow Pages, dLook, TrueLocal and Hotfrog. There are also a lot of free directories and others that have been formed for specific industries (niche directories).

While printed directories have been available for many years, the movement to online has enabled directories to offer more for consumers and also advertisers. Advantages for consumers include the ability to quickly search by keyword or business name in very defined local area, being able see business reviews and more information about the business as well as being able to click through to a website, send off a quick email enquiry or request a quote all in the same session.

For advertisers the advantages include being able to write more information about their business and the products and services they offer, the ability to link to their email and website, as well as load video commercials and pictures.

Display Advertising

Display advertising is often served on a website by a digital media (advertising) agency, though some sites may have their own in-house ad servers. Many sites are also offering banner placements through Google as well.

Typically, banner advertising is paid on a CPM basis, though may also be offered on a CPC or CPA (cost per action). An example of CPA might be a financial institution that offers $X for each successful credit card application they receive. The CPA model is very popular with affiliate programs.

Classifieds Advertising

This form of advertising is popular with people (and businesses to a lesser extent) selling products. Cars and jobs are the most popular types of classifieds. This type of advertising was once popular with tradesmen.

Online Spending 2008

Expenditure on online advertising continued strong growth in the first quarter 2008 – increasing by 30.8% compared to the first quarter of 2007 (or around 1.5% on Q4 2007). This was the largest first quarter spend since reporting commenced in 2002 (source).