Australia's online advertising spend drops 12 per cent during April - June quarter

COVID-19 impact on marketing spend highlighted in latest IAB Online Advertising Expenditure report

Online advertising revenue for the April – June quarter declined by 12 per cent year-on-year, a reflection of the continued COVID-19 impact on marketing spend in Australia.

The latest IAB Australia Online Advertising Expenditure report, produced in partnership with PwC, found all online advertising categories to have declined in Q2 compared to 2019 figures, with classifieds reporting the steeping decline during the period (22.7 per cent). This was followed by general display (down 11 per cent) and search and directories (down 9 per cent).

In total, Australia’s online advertising market for Q2, 2020 represented $2.03 billion in spending. However, the IAB said the total for the full financial year was $9.1 billion, a 1 per cent increase year-on-year.

The largest chunk of this was mobile advertising, which was worth $4.9 billion and represented 54 per cent of total spend, up 6 per cent compared to 2019. General display as a category maintained share, coming in at $3.4 billion in FY2020, while video showed the fastest growth, increasing 15.4 per cent and accounting for $1.7bn spend.

The IAB report also found share of expenditure moving from desktop to connected TV during financial year 2020, with connected TV accounting for 38 per cent of content publishers video expenditure by device. In comparison, desktop sat at 35 per cent and mobile at 26 per cent. 

The top five industry category spenders in FY2020 were automotive, retail, finance, travel and real estate. Retail and technology experienced the largest increase in share during the year, up 1.3 percentage points, while automotive experienced the largest decline in share, down 5.7 percentage points.

However, during Q2, real estate and entertainment dropped out of the top five online advertising spending categories, elevating media and technology up the list. According to the IAB, the retail sector experienced the largest increase in share quarter-on-quarter during Q2, while the travel sector unsurprisingly experienced the largest decline.

Another trends noted by IAB is the continued shift to programmatic advertising. This reached a new peak in latest June quarter, and 44 per cent of all advertising on content sites bought programmatically. This contrasted with 41 per cent being bought from agencies using insertion orders (IOs). What’s more, 65 per cent of content publisher’s video inventory was bought programmatically during the second quarter, up 9 percentage points in the first three months of 2020. The percentage of inventory bought directly from advertisers decreased to 15 per cent.  

Commenting on the findings, IAB CEO, Gail Le Roy, said she wasn’t surprised to see the double-digit drop in online ad spend in April - June as the association had anticipated a tough quarter for the industry.  

Although IAB’s Q1 online advertising report found spending up 3.8 per cent year-on-year, slowing growth as a result of the Australian bushfires plus first weeks of the COVID-19 pandemic could already be seen in the results.  

“Within this, however, video is proving to be extremely resilient and holding steady-year on-year,” she said. “We are also seeing retail, government and technology experience the largest increase in share compared to the previous quarter.” 

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, follow our regular updates via CMO Australia's Linkedin company page, or join us on Facebook: https://www.facebook.com/CMOAustralia

 

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