Online advertising tipped to reach $543 million by 2017

While print media continues to tumble and find its footing in the digital age, online advertising is on a rocket ride to the top. According to PwC's latest entertainment and media outlook, online advertising is expected to reach $543 million in annual revenue by 2017.

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The accountancy firm's forecasts show online advertising in New Zealand growing at a compound annual rate (CAGR) of 8.9 percent over the next five years. PwC partner and tech industry specialist Paul Brabin says by 2015 online advertising will outpace print for revenue and take the number two billing in the industry behind television.

As with almost all other areas of the technology spectrum, mobile content is having a massive impact in the way advertising and media is made commerciable in New Zealand. Brabin says while the overall revenue figures are still smaller than other segments, the rate of growth shows it's unlikely to let up any time soon.

“Mobile advertising is taking off in New Zealand and has grown a massive 175 percent in 2012 as more Kiwis carry smart phones, while our broadcasters are successfully monetising online catch-up TV content by selling advertising,” says Brabin.

"It may be a lower number in terms of total revenue and total spend, but it's a very significant growth. It will follow the proliferation of mobile devices and tablets in the country."

The print industry will face the toughest challenges in the next half decade, according to the PwC report. Prabin says in order to survive (and then later flourish) newspapers and magazines need to embrace digital technologies and monetize their content.

“The long-term decline in newspaper advertising revenues means newspaper brands must urgently monetise their digital channels. Pleasingly, our newspaper publishers are following global trends seen in mature markets by building digital paywalls. Paying for our online news content will become the new normal,” he says.

PwC predicts the overall media and entertainment industry to grow at an annual rate of 3.5 percent – from $5.7 billion in 2012 to $6.8 billion in 2017.

“On the whole, the future looks promising for New Zealand’s entertainment and media businesses, and New Zealand trends are consistent with global trends," says Prabin.

“The winners include the internet advertising industry and providers and the TV and video game markets. Our magazine, film, radio and music industries are holding their ground, while the newspaper industry is showing signs it is better understanding how to monetise its digital content.”

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