Online now third-highest channel as ad spending rises 20pc in H1

11 Nov 2011

Bartley O'Connor, PwC, with Suzanne McElligott, CEO, IAB Ireland

Irish online advertising showed its highest level of growth yet at 20.5pc in the first half of 2011, according to a new study. By comparison, spend on other media is actually down 1.5pc year-on-year.

The report by the Internet Advertising Bureau and PricewaterhouseCoopers gives the online advertising channel a 13pc share of the total market. Online ad spend in Ireland during the first half of the year was €64.9m, while spend on other media, including press, TV and radio, was €443.4m.

Online advertising is now the third-largest advertising medium in Ireland, after newspapers and TV, and has surpassed traditional channels, such as radio, outdoor, cinema and magazines.

In the UK, however, online advertising has already surpassed TV to become the second-largest advertising channel. Many other countries count online advertising in the mid to high 20s, while Ireland’s relatively slow adoption of the medium gives it a 13pc share of the total market. But it seems we’re beginning to show signs of a willingness to catch up fast.

Display, search and classified ad segments

Display advertising represents 34pc of the total online spend in Ireland and is being spurred on by increased adoption by brands and its use in social media. Display ads, including considerable spend on video, are growing at a rate of 41pc year-on-year and the market was worth €20.7m in the first half of the year.

The search advertising market – dominated by Google – accounts for 45pc of the total online spend in Ireland and is growing at a rate of 17pc. The market was worth €27.2m in Ireland in the first half of this year.

Classified advertising accounts for 21pc of the market and spending of €12.7m was recorded in the first half.

The H1 2011 Adspend Study provides a breakdown of category spend for the display format. Telecommunications, FMCG and Entertainment/Media categories tie for poll position at 12pc respectively.

The top spending category for classified advertising in the first half of 2011 was Property/Recruitment at 36pc, followed by Auto in second place at 28pc.

For the first time, an estimate of display ad spend on mobile has been provided in the ad spend study.

Mobile advertising is still a relatively new platform in the digital media mix. The dramatic increase in smartphone penetration and usage has contributed to increased interest in mobile advertising. Display ad spend on mobile is estimated at €1.6m in H1 2011.

A key driver for growth is no doubt the rise in broadband usage in Ireland. Fixed broadband increased by 8pc between Q2 2010 and Q2 2011. Mobile broadband grew by 14.8pc between Q2 2010 and Q2 2011.

People spend as much time online as watching TV

Time spent online at two hours and 44 minutes now mirrors time spent watching TV at two hours 49 minutes (Red C: De-Coding Digital Trends Ireland 2011). The average Irish Internet user spends eight hours per week on social media, the heaviest users of social media are 18-24-year-olds at 11 hours per week (Behaviour & Attitudes: Bacardi Together Poll, July 2011).

Some 77pc of the participants in the IAB PwC study anticipate “growth” or “strong growth” in the next six months.

A 55pc increase in smartphone ownership is anticipated in 2012 in the Irish market, with smartphones potentially overtaking desktops.

PricewaterhouseCooper’s Bartley O’Connor told “This is the first half where we’ve seen growth levels beyond 20pc. Are we up there with the UK and other markets? Definitely not. Internet overtook TV for the first time in the UK last year.

“TV advertising in Ireland is in the hundreds of millions, so yes, we have some way to go to catch up.

“The factors driving the growth levels we’ve seen in Ireland is a reflection of the fact that more people are online, businesses are online. The advertising industry realises now that this is not a fad and we believe the next wave of the internet will drive significant growth in this area.

“We’re looking at serious businesses and traditional brands looking seriously at social media. They are realising that their target customers are spending most of their time online, and that’s where they need to be. The numbers will record higher growth next time. The worst is hopefully behind the advertising industry and it’s becoming clear to all that there’s no recession online.”

O’Connor said that traditional media channels need to realise that more and more people are carrying smartphones and tablet computers and that eventually all segments of the advertising industry will be carried along on the digital tide.

Commenting on the study results, Suzanne McElligott, chief executive of IAB Ireland, said: “The record 20pc growth tracked in our H1 2011 report highlights that digital advertising has moved centre stage in the media mix.

“With the continued growth in online usage and increased time being spent online, digital advertising is now a significant driver for brand growth for advertisers.”