The just released IAB report is showing $57.6m in online advertising spend for 1H 2006. That would imply we will hit well over $120-130m for the 2006 calendar year, once you take natural growth and the Christmas season into account.
Indeed the IAB is showing over 20% growth from Q1 to Q2, which would imply$145m for the year (call it $150m)if the growth continues. That would be rich rewards for the industry in a year where we have finally seen some real investment and engagement by big media.
Last year the ASA collected $65m of total spend, and if we compare the two directly then we’d be seeing a year on year growth of 80-120%.
That’s pretty wild – but is it reasonable?
There are two things to consider.
Firstly, and most importantly, are measurement differences. The ASA and IAB stats are collated in different ways and for different purposes. The biggest difference vetween the two is that the IAB numbers include an estimate of search revenue – which is 25% of the total. That would drop the year on year increase to a ‘mere’ 40% to 70% increase.
Secondly, is this possible given what has happened in other markets? The answer to that is easy – a resounding yes. A lot of the overseas markets have seen years with over 100% growth as they moved up towards (and beyond in some cases) 10% of total ad spend. That 10% would be $220m in NZ, so we have a way to go.
So – are we seeing that epic year in ad spend increase? or is something else going on?
Both. Ad spend is certainly on the rise. But also the way the two eries of data are collected is different.
It’s not just the introduction of search data. Here are some of the things that I am unclear on:
Are agency commissions included (they are in the IAB version)?
Are internal ad placements included and at what price? (Some companies place huge amounts of internal advertisements on their websites e.g. Xtra and all the Telecom ads, or MSN* and the Seek, Autotrader and other PBL ads).
Are advertisements priced at market rates (or are they part of a bundle, and the online component over valued?)
No matter. The results year to date are outstanding, and it is wonderful to see online advertising in New Zealand finally come of age. What follows, of course, is more investments, better sites and new businesses.
*the MSN site, incidentally, still sucks the big one. How hard can it be?
Lance Wiggs 
Just sat down to write a similar review.
To answer your questions, IAB/PwC Insight Q1&Q2 2007 includes agency commissions on sold inventory only (no unsold house ads included) and based on actual price sold – no ratecard markups in this report. This is why PwC was used – same for IAB in UK, US and Aussie.
The ASA was miles out – one of the reasons for the PwC report.
A measurement of quarter on quarter organic growth will not be possible until after Q1 next year when we get some like-for-like comparisons. For instance, industry Q1 revenue can be soft due to the summer holiday season. We’ll find out next year, I guess.
Hell, I’ll have to blog about the rugby now …
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From today’s Internet Bureau newsletter:
“Compare this figure to the 2006 ASA ad spend figure of $65m and we can now corroborate that the online ad spend market is bigger than previously reported. This is due to an increase in the number of publishers contributing – 13 online companies took part in the ASA report with 150 companies contributing to the IABNZ/PwC turnover figures.”
This would explain the large difference and any comparisons fairly meaningless. No doubt online advertising is increasing though.
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MG
good to hear. The industry needs a scorecard that it and other’s can trust. The ASA struggled away for years (my father was the instigator) asking the online industry to form a proper organisation and to track ad spend correctly. It seems that this is finally here, and the ASA may simply pick up the online pwc numbers when it agglomerates the total NZ advertising spend over all categories.
However, for Fraser. the 13 companies that took part n the ASA were the giants, excluding Google whose ads are now estimated. I’d doubt very much that the minnows add a huge amount even now (and I used to run some). US experience is that the winners take all, but we are now seeing the long tail shake. Roll on the kiwi bloggers
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