Is New Zealand’s Online Advertising On Target?

published by on 9th October 2006 under General

Sourced from nzonlinemedia.blog.co.nz


The NZ Online Ad Market – just how big is it?

Access to the Internet in New Zealand ranks among the highest in the OECD with 80% of the population accessing the Internet and over 60% using it regularly1. A recent study commissioned by the Internet Bureau through Roy Morgan, reports that “NZ agencies say they are already allocating an average of 8% of their media budgets to online, and intend to allocate an average of 12% to online in 2006- 2007. That’s a far cry from being the ‘online laggards’ that agencies have sometimes been painted as being.”

This is an interesting statistic – if true, it means that next year, according to 39 agencies polled, online advertising will equal that of Radio and Magazines in NZ. This feat has only been achieved in a few rarefied markets globally. So that must mean NZ is in the leading group of markets internationally right?

Unfortunately this is not the reality. If these numbers were correct, this would put the online advertising market at a lofty NZ$176M in 2006 and $264M next year. It would have achieved rapid growth of about 400% on the 2005 figure of $44M (2.1% of adspend).2

Mention these numbers to any publisher and they will simply ask, “so where’s my share of this because I’m not seeing any.” (That’s the polite version).

Of course the major question here is what people say they do versus what they actually do. And for some reason agencies are overstating their position

Figures are quite sparse, however the best information that we have is that NZ online adspend is more likely to reach $88M (4%) during 20063. A much more modest 100% growth on 2005 – still impressive, but a little less stratospheric.

At this point in the development of the industry there are many questions that should be asked by marketers.

This paper doesn’t pretend to have all the answers, but attempts to outline the background to the market situation in NZ, and then poses some questions for debate.

Without healthy debate around the issues to prompt changes, the concern is that New Zealand will continue to fall behind other markets. This could occur despite the fact that Kiwi consumers are spending the same or more time online than other markets.

The International Context – NZ is behind globally

At 4% of adspend in 2006 online advertising in NZ is languishing behind other markets. Growth projections also indicate how far off the pace NZ will remain for the next few years. In contrast our nearest market Australia is enjoying a major boom with estimates placing online adspend at around 9.4%4 based on solid year on year growth of around 60% over the last 3 years.

It’s time that the industry in NZ recognises how far we are behind, and acts with some urgency on the issues.

There is no doubt that growth is still fast and furious in the online space, but is NZ making the most of it’s potential?

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