Why online ad spend is low in New Zealand #2

So NZ has low broadband penetration, which means kiwi’s spend less time online, and have less desire to click on random advertising links.

But that is not the full story for the paucity of media spend here.

3: The lack of eCommerce players

Aside from Trade Me, the airlines and banks, New Zealand has had no eCommerce to speak of. Dating sites are owned by players with large traffic (NZ City and Trade Me) so they did not need to advertise. There is no Amazon nor Buy.com nor Best Buy here, and Trade Me doesn’t advertise its Auctions, Motors, Property or Jobs sites – all big categories of eCommerce. (eBay does in Australia- and to excess, and Seek does in both countries). The airlines and banks arrived late to the party, despite increasing amounts of their business being sourced online.

That lack of eCommerce meant less online ad spend from online players, a situation which has not changed that much even today.

4: The professionalism gap

In Australia the media companies invested early in dot coms. PBL owns a chunk of Seek, runs nineMSN, and had previous involvement with eBay Australia. Fairfax has some interesting properties – such as drive, RSVP, and the Sydney Morning Herald amongst others. These big media companies realised early that online advertising was going big, and allocated resources, including quality staff, accordingly.

Meanwhile in New Zealand the flagship xtraMSN site was run by hapless Telecom NZ, and the newspaper sites were stuck with archaic designs, were horribly understaffed in sales and ignored by their bosses. For a long time there were no big league media players selling or promoting online advertising in NZ. Telecom didn’t know how, Stuff and NZHerald didn’t care. Snow/Surf (MM Group), NZ Girl and Trade Me amongst others entered the market, with Trade Me in particular earning good money from their traffic dominance.

The NZ advertising agencies really didn’t understand the media, but it was not their fault – there were not enough evangelists selling the space.

The difference between xtraMSN and NineMSN is a great case study. Several months ago, when I last looked, the advertisements on xtraMSN were almost all internal Telecom ones. Things are better now, but not as good as nineMSN, where they have been successfully selling ads for some time.

The real difference can be seen in their ratecards. XtraMSN’s rate card charges $30,000 per week for a floating ad on the MSN homepage, while nineMSN charges AU$100,000 per day.

An MSN Messenger text link ad costs $15,000 per week in NZ, and $15,000 per month in Australia. That Australian text ad is for 5% of the rotation though, and it appears the NZ one is full time – I could be wrong.

That’s the past – but recently things are looking much better for the online advertising industry in NZ….

Published by Lance Wiggs


One reply on “Why online ad spend is low in New Zealand #2”

  1. I think we will see ecommerce grow fairly rapidly in NZ over the next year or two. Trademe has bought possibilty of ecommerce to the masses and has raised their expectations. There will create increasing pressure for existing retailers to run proper ecommerce sites, rather than brochure-ware sites. A handful of retailers such as Dick Smith, Noel Leeming and Woolworths are leading the way with proper ecommerce stores.

    Once ecommerce gets a hold on-line ad spend will increase, as these businesses see the value.


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