What you need to know:

• Australia's annual digital ad market is topped $10bn for the first time, after double digit investment uplift in the first three months of this year.
• March 2021 quarter spend was up 25.8 per cent on last year, to $2.883bn.
• Retail spend dominated, holding 16.4 per cent of the general display market and 17.4 per cent of the video market.
• IAB Australia CEO Gai Le Roy said the lines between ‘traditional’ and ‘digital’ ad investment continue to blur.

The Australian digital advertising market is officially worth more than $10 billion, per the IAB's figures for the last four quarters, after major investments in video and mobile ads fuelled a double-digit, post-Covid recovery.  

The milestone comes as the March 2021 quarter grew 25.8 per cent on last year. The latest data, prepared by PwC, showed $2.88 billion spent on online ads in the three months to March.

“After a couple of years of the overall Australian ad market being suppressed, we have seen overall ad investment increase over the last two quarters,” said IAB Australia CEO, Gai Le Roy.

“The combination of marketers investing again, consumer media habits changing, the growth of e-commerce and the continued digitisation of inventory – OOH, audio, even traditional trade retail investment – is driving growth that we expect to see continue through the rest of the calendar year.”

All categories reported double digit growth on last year’s corresponding March quarter. Search and directories increased by 26.5 per cent, general display grew by 28.9 per cent, and classifieds grew 18.5 per cent.

While overall spend slipped slightly from the December 2020 quarter due to seasonal declines, year on year growth was most pronounced in video’s share of general display. Video ads grew by 32 per cent to $571.7m in the video category, and 31 per cent to $334.4m in in-feed/native video. Standard display video’s share grew by 19 per cent to $148.8m.

Programmatic trading of content publishers’ video inventory increased to 61 per cent of total expenditure, versus 34 per cent bought through agencies.

The retail sector dominated spend across general display and video, with 16.4 per cent and 17.4 per cent of category share respectively, while the travel sector saw a 1.5 per cent increase in share to 3.8 per cent – marking the start of a domestic-led recovery.

The automotive sector has fallen from 26 per cent of general display advertising to just 12 per cent, which Le Roy said was primarily due to impacts relating to Covid.

“The auto sector had pulled back spend before Covid with fewer new car launches and changes in buying habits for new cars, more recently spend has pulled back due to supply issues,” she said.

“Once manufacturers can get more cars into the country we expect to see this spend increase again, smart marketers are still keeping their brand spend strong as consumers are now using this time with what they will purchase once stock is available.”

The industry will change a lot in the next few years, Le Roy added, making categories increasingly difficult to define.

“We see the lines between not only what is ‘traditional’ versus ‘digital’ ad investment blurring, but what is a commerce or retail type investment versus a paid ad also merging,” she said.

“So undoubtedly the digital advertising market will continue to grow with opportunities for new players to enter – but the shape and definition of the market will evolve.”