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A new report shows Australia’s online search advertising market is experiencing double-digit growth and is expected to continue outperforming all other major online advertising segments as mobile search increases.
According to the latest Frost and Sullivan Australian Online Search and Directories Market 2013 report, online search grew 23 per cent between June 2012 and June 2013, exceeding all other types of major online advertising segments including online general advertising such as sponsorships, integrated site content and e-newsletters, classified and directories.
Online search is forecast to outpace online directories over the next five years and chalk up a compound annual growth rate (CAGR) of 16 per cent through to 2018. This will see the total online search and directories market share increase from 83 per cent to 91 per cent within the next five years.
Frost and Sullivan ICT practice senior research manager, Phil Harpur, also pointed out the volume of local search conducted via mobile is growing at a much faster rate than fixed Internet connections. The figure should come as no surprise to any marketers, given smartphones and tablets are increasingly becoming the preferred channel choice for consumers.
A report produced earlier this year by Telsyte also reported mobile search advertising is experiencing faster growth in Australia than expected, representing 30 per cent of the total paid search links being served during the second quarter of this year. The analyst group expected this figure to rise to 33.3 per cent in the fourth quarter of 2013.
In line with this, a Mobile Marketing Association survey across Asia-Pacific found mobile marketing budgets are set to get a big boost next year, with 90 per cent of respondents indicating more spend will be directed at capitalising on rapid smartphone and tablet device adoption. One-third of marketers expected mobile spend to increase by up to 75 per cent.
However, what remains a concern is that many marketers still don’t have formalised mobile strategies in place, running the risk of disconnect in their customer engagement.
In a sign of rising interest in geo-targeting and location-based advertising, Harpur noted a high proportion of mobile searches optimised for location-based material in the Frost and Sullivan report. In addition, click-to-call features are becoming more prominent in mobile search.
This year’s report also claimed the percentage of advertising budgets going on search advertising and SEO services will increase over the past 12 months, a trend led by the migration from offline to online channels. More than 50 per cent of advertisers divert funds from traditional media advertising towards augmenting their search advertising expenditure, Frost and Sullivan stated, and are increasingly focused on optimising advertising and marketing inventory and services into a single SEO strategy.
Key reasons for search engine advertising activity include the relatively high click through rates, and low cost-per-click on mobile devices.
While Google dominates the market, Sensis’ search advertising offering, Sensis ClickManager, experienced strong revenue growth in 2013, the report stated. Adlux also established itself with solid growth off a small base, Harpur added.
Online directories growth stabilised during 2012-2013 after the slowdown in recent years, with overall revenue growth increasing from 1 to 4 per cent. However, Frost and Sullivan warned Google’s influence and control over the search and online directory space continues to challenge the market and predicted revenues continuing to gradually decline.