Australian digital advertising revenue reached $2.1 billion for the first quarter of 2018, according to the Online Advertising Expenditure Report released today by IAB/PwC.

Overall digital advertising revenue increased 13 per cent year-on-year, driven by growth in mobile and video, as well as General Display advertising which recorded 20.3 per cent growth.

Classifieds increased 11.2 per cent and Search recorded 8.8 percent year-on-year growth. Both video and mobile advertising were up 38 per cent and 39 per cent respectively in Q1 2018 versus Q1 2017, with video reaching $320 million for the quarter, representing 42 per cent of the total General Display advertising category.

IAB/PwC Online Advertising Expenditure Report Q1 2018
Source: IAB/PwC Online Advertising Expenditure Report Q1 2018

“Our market is chameleon-like, mirroring the significant shifts in consumer behaviour towards mobile and video, so it’s little surprise to see an increased investment in these formats,” said Gai Le Roy, IAB Director of Research.

“While it’s likely we will see a continued softening in some of the more established digital ad revenue streams, we fully expect mobile and video advertising continue to surge as marketers explore and challenge the possibilities of digital to build trust and reputation for their brands.”

The latest report shows Search and Directories continues to represent the largest proportion of the online advertising market in Australia at 45 per cent ($937m) for the March quarter, with General Display at 36 per cent ($767m) and Classifieds at 19 per cent ($397m).

Independent research company, CEASA confirmed in March 2018 that digital represented 50.7 per cent share of the total advertising market expenditure of $15.6B for calendar year 2017.

International comparisons

The data shows that the Australian market more closely resembles the UK than either the US or NZ markets, with Display advertising representing 36 per cent and 35 per cent of ad expenditure in Australia and the UK (respectively) compared to 50 per cent of ad spend in the US.

Similarly Australia’s share of video advertising as a proportion of total online advertising is 38 per cent, in line with the UK’s 39 per cent and significantly higher than both the US (29 per cent) and NZ (23 per cent).

IAB/PwC Online Advertising Expenditure Report Q1 2018
IAB/PwC Online Advertising Expenditure Report Q1 2018

Advertisers by category

According to the Q1 report, auto advertisers continue to be the largest investors in digital display advertising at 18.3 per cent share of spend, however the FMCG industry is increasing its spend and is now the largest advertiser category for video advertising at 12.2 per cent.

Overall the range of industries investing in video has diversified over the last 12 months, with industries including finance (10.8 per cent) and telecommunications (8.7 per cent) increasing their video spends. The top five spenders in video who make up a combined 47.4 per cent of the total market include FMCG, finance, telecommunications, retail and automotive.

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