Frost & Sullivan: Online Search: Australia's Fastest Growing Online Advertising Segment
Announcement posted by Frost & Sullivan 14 Nov 2011
Investment in print directories continues to erode as the Online Search and Directories market increases by 23% in 2010-2011
Sydney, 14 November 2011 – According to Frost & Sullivan's latest digital media research report, online search and online directory advertising expenditure grew by 23 per cent in the 12 months to June 2011 to reach a total value of $1.4 billion. Search advertising grew particularly strongly, outperforming all other mainstream online advertising activities including online general advertising (online banner, advertorials and email marketing), online classifieds and online directories, with annual growth in the 12 months to June 2011 of 28%.
Within the online search and directories segment, search advertising accounted for over three quarters (76 per cent) of revenues while online directories advertising claimed 24 per cent.
Advertiser interest in search and online directories remains strong with a significantly higher proportion of 2011 advertisers planning to increase their investment in both search and online directories advertising compared to last year. However there remains a note of caution in the industry due to uncertainty as a result of the fragile recovery from the global financial crisis continues, with 53 per cent of advertisers indicating that their budget allocation to search advertising has remained unchanged in 2011.
Google continues to dominate the local search advertising market with an 88 per cent revenue market share. Among other players, Microsoft's Bing in partnership with Yahoo Search Marketing (YSM) has shown slow but steady growth since its launch in 2009. Another recent entrant, the Australian owned and run independent search network, AdLux has also successfully established itself as an alternative to Google and YSM/Bing in the Australian search advertising market.
Continuing the trend of the past few years revenues from online directories advertising recorded slower growth, dropping from 10 per cent growth during the 2010 financial year to 7 per cent in 2011. The fragmented market which is served by both multi-industry and industry specific online directories is dominated by Sensis which accounts for 85 per cent of revenues. Outside of Sensis the other mainstream and niche directory segments displayed reasonably strong growth, albeit from a relatively small base. However, the report cautions that the online directories market is increasingly becoming a more challenging environment as its business model is being impacted by substitutes, particularly Internet search, and some of the smaller online directories are losing market share or being forced out of the market.
Frost & Sullivan predicts that online search revenues will continue to outpace those from online directories over the next five years, with search expected to experience compound annual growth of 16 per cent compared to 6 per cent for online directories.
Other important trends to emerge in the search and online directories segment during 2011 include:
* The rise of social media as a component of the search engine optimisation (SEO) strategy. Most local and international search agencies have developed a separate strategy for optimising on social media sites, driven by marketers who are increasingly turning to pay per click advertising on social media channels to complement placements on traditional search engines.
* Social media is also becoming an important part of the online directories offering. One example of this can be seen in the September 2011 launch of a free White Pages App from Sensis, incorporating Twitter feeds, Facebook links, trading hours and special deals.
* The increasing ownership of smartphones and mobile tablet devices is creating a tremendous opportunity for the search and online directories market, with most of the major online directories players launching apps. In addition to those for the iPhone and iPad, a greater variety of apps from other operating systems (such as Google's Android platform) are now starting to hit the market.
* Directory searches for traditional search items such as phone numbers are becoming less important due to the increasing availability of this information via general web searches. Frost & Sullivan suggests that the next phase in the evolution of online directories is to provide a higher level of user experience around the theme of ‘discovery’ of information regarding local businesses such as restaurants, especially in the area of social media via tools such as ratings & reviews.
Phil Harpur, Senior Research Manager, Frost & Sullivan said, “Based on local trends and from what we've seen internationally, we expect search to continue to increase its share of this segment, growing from 76 per cent in 2011 to 83 per cent in 2016. Major drivers for growth will include new opportunities that are emerging from the mobile and social media channels. At the same time, the total search and online directories segment is becoming more mature and this will result in slower growth across both search and online directories areas during the next five years.”
Australian Online Search and Directories Market 2011 forms part of the Frost & Sullivan’s Digital Media Research Program 2011. All research services included in subscriptions provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants. Interviews with the press are available.
About Frost & Sullivan
Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best-in-class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best-practice models to drive the generation, evaluation, and implementation of powerful growth strategies. Frost & Sullivan leverages 50 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from more than 40 offices on six continents. To join our Growth Partnership, please visit http://www.frost.com on six continents.
Within the online search and directories segment, search advertising accounted for over three quarters (76 per cent) of revenues while online directories advertising claimed 24 per cent.
Advertiser interest in search and online directories remains strong with a significantly higher proportion of 2011 advertisers planning to increase their investment in both search and online directories advertising compared to last year. However there remains a note of caution in the industry due to uncertainty as a result of the fragile recovery from the global financial crisis continues, with 53 per cent of advertisers indicating that their budget allocation to search advertising has remained unchanged in 2011.
Google continues to dominate the local search advertising market with an 88 per cent revenue market share. Among other players, Microsoft's Bing in partnership with Yahoo Search Marketing (YSM) has shown slow but steady growth since its launch in 2009. Another recent entrant, the Australian owned and run independent search network, AdLux has also successfully established itself as an alternative to Google and YSM/Bing in the Australian search advertising market.
Continuing the trend of the past few years revenues from online directories advertising recorded slower growth, dropping from 10 per cent growth during the 2010 financial year to 7 per cent in 2011. The fragmented market which is served by both multi-industry and industry specific online directories is dominated by Sensis which accounts for 85 per cent of revenues. Outside of Sensis the other mainstream and niche directory segments displayed reasonably strong growth, albeit from a relatively small base. However, the report cautions that the online directories market is increasingly becoming a more challenging environment as its business model is being impacted by substitutes, particularly Internet search, and some of the smaller online directories are losing market share or being forced out of the market.
Frost & Sullivan predicts that online search revenues will continue to outpace those from online directories over the next five years, with search expected to experience compound annual growth of 16 per cent compared to 6 per cent for online directories.
Other important trends to emerge in the search and online directories segment during 2011 include:
* The rise of social media as a component of the search engine optimisation (SEO) strategy. Most local and international search agencies have developed a separate strategy for optimising on social media sites, driven by marketers who are increasingly turning to pay per click advertising on social media channels to complement placements on traditional search engines.
* Social media is also becoming an important part of the online directories offering. One example of this can be seen in the September 2011 launch of a free White Pages App from Sensis, incorporating Twitter feeds, Facebook links, trading hours and special deals.
* The increasing ownership of smartphones and mobile tablet devices is creating a tremendous opportunity for the search and online directories market, with most of the major online directories players launching apps. In addition to those for the iPhone and iPad, a greater variety of apps from other operating systems (such as Google's Android platform) are now starting to hit the market.
* Directory searches for traditional search items such as phone numbers are becoming less important due to the increasing availability of this information via general web searches. Frost & Sullivan suggests that the next phase in the evolution of online directories is to provide a higher level of user experience around the theme of ‘discovery’ of information regarding local businesses such as restaurants, especially in the area of social media via tools such as ratings & reviews.
Phil Harpur, Senior Research Manager, Frost & Sullivan said, “Based on local trends and from what we've seen internationally, we expect search to continue to increase its share of this segment, growing from 76 per cent in 2011 to 83 per cent in 2016. Major drivers for growth will include new opportunities that are emerging from the mobile and social media channels. At the same time, the total search and online directories segment is becoming more mature and this will result in slower growth across both search and online directories areas during the next five years.”
Australian Online Search and Directories Market 2011 forms part of the Frost & Sullivan’s Digital Media Research Program 2011. All research services included in subscriptions provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants. Interviews with the press are available.
About Frost & Sullivan
Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best-in-class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best-practice models to drive the generation, evaluation, and implementation of powerful growth strategies. Frost & Sullivan leverages 50 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from more than 40 offices on six continents. To join our Growth Partnership, please visit http://www.frost.com on six continents.