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Digital dollars: Online ads’ popularity boosts digital advertising agencies’ revenue

The digital advertising agencies industry has posted double-digit growth figures annually over the past five years. Online advertising solutions have risen in popularity among private- and public-sector organisations, compared with traditional media such as print and TV. Growing awareness of the efficiency with which digital marketing solutions can reach their intended demographics has driven this surge in popularity. As a result, digital marketing solutions have been perceived as being cost-effective among consumers. The rising adoption of IT and telecommunications over the past five years is also expected to work in the industry’s favour. Digital advertising agencies have benefited from rising demand for internet-based marketing strategies from organisations that lacked an online presence prior to the past five-year period.

The most widely used form of digital advertising over the past five years has been search engine marketing, given its ability to drive intent-laden consumer traffic to websites and online stores. Social media marketing, which refers to the use of platforms such as Facebook and Twitter as advertising channels, has also been a key driver of industry growth over the period. Businesses have increasingly required a social media presence across multiple platforms to maintain their brand awareness among the Australian public, given the amount of web traffic attracted to such networks. These public platforms allow advertisers to pick the demographic for their marketing material, based on age, gender, location and other information gathered from online activity.

Mobile ads have also grown steadily as a source of income for digital advertisers over the past five years. Given the rising volume of domestic internet traffic generated by mobile devices, many of the industry’s clients have increasingly demanded advertising materials compatible with mobile operating systems. Overall, the digital advertising agencies industry is expected to grow at an annualised 18.1% over the five years through 2016-17, to reach $1.5 billion. This growth rate far outstrips that of the wider advertising agencies industry, which is forecast to grow at an annualised 2.4% over the same period.

The digital advertising agencies industry is anticipated to grow at an annualised 13.2% over the five years through 2021-22, to reach $2.8 billion. Increasing demand for online advertising solutions and the adoption of hardware such as virtual reality headsets and smartwatches are forecast to drive this growth and facilitate new marketing channels. However, the growing prevalence of ad blockers among households may constrain this trend. Research from the Interactive Advertising Bureau showed that 27.0% of Australians were using ad blockers as of November 2016, while 40.0% were unaware of what they were. The use of ad blockers is projected to rise over the next five years.

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Digital Advertising Agencies

Advertising Agencies

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