Advertising services is almost a $2 billion per year industry in Australia, but it has shown to be extremely sensitive to changing economic conditions. When the economy falls, clients cut back on their promotional spending. In 2010, the advertising industry in Australia suffered from revenue losses of $1.6 million compared to the previous year. Clients reduced their spending on mainstream media and instead, began turning to inexpensive new media. New media advertising includes websites, domain names, mobile phone text messages, podcasts and social networking platforms such as YouTube, Facebook and Twitter.
While the revenue of Australian advertising services is $2 billion annually, total spending on advertising in Australia was $11 billion as of 2009. This comparison shows that less than one-fifth of advertisers use a professional advertising service and presumably, creating the advertising themselves or using the in-house services of the media.
The biggest spenders on advertising in Australia are Coles Group and the Australian government, each spending about $180 million per year. Other names on the list of the top 10 advertising spenders include Telstra, Nestle/Loreal, Suncorp, Woolworths and Harvey Norman. More than one state government also made this list as well as large income protection insurance companies.
According to Nielsen Research, each of the top 6 advertising spenders spent an average of $120 million per year. Additionally, it is estimated that one-quarter of all advertising spending is by only 45 businesses or organizations. However, over 2 million businesses operate in Australia, which means 25 percent of Australia’s advertising business is controlled by less than one percent of all businesses. (read more at www.finance.gov.au)
Small businesses in Australia cannot hope to compete for the limited but prime advertising space in the traditional media. Because advertising space goes to the highest bidder, small businesses are forced out, making it difficult to compete with the big corporations. Small businesses are forced into making a choice between no advertising and alternative advertising.
As reflected in the statistics, the choice most of Australia’s small businesses are making is to advertise in new media. New media tends to be less expensive and it can direct advertisements to a very specific demographic. Small businesses jumping into new media advertising accounts for the fact that while overall advertising has remained nearly stagnant from 2009 to 2010, online and other new media advertising has grown to nearly $2 billion dollars as of June 2010, as reported by the Interactive Advertising Bureau (IAB). The biggest sector in new media advertising is retail, which is followed by finance.