Growth in Australian Online Classifieds

The Australian online classifieds advertising market experienced 26 percent growth in 2008 to finish the calendar year valued at AU$498 million according to research by consulting company Frost & Sullivan.

The forecasts were released in the Australia Online Classifieds Advertising Market 2008-2012, the latest research in Frost & Sullivan’s annual examination into the state of the local online advertising industry.

Frost & Sullivan say that in February 2009 the market began to feel the impact of the economic downturn and the continued slowdown is likely to result in a much smaller growth rate of 18 percent for both 2009 and 2010.

The fastest growing online classifieds sector in 2008 was real estate with 38 percent growth, driven by increased yields from existing residential advertisers and volume growth in commercial property advertising. Residential advertising continued to dominate revenues while new segments such as holiday properties are also contributing to growth. During 2009-2011, Frost & Sullivan predicts the sector will further expand with the emergence of rural market classifieds. However, it notes of a significant potential restraint on growth in the shape of industry-owned websites, such as homehound.com.au, which now commands the third highest audience in property sites.

Automotive was the second fastest growing sector, increasing by 31 percent. While employment dropped to 45 percent, afer being hit by the impact of the downturn on the recruitment industry.

Looking ahead, Frost & Sullivan predicts a slower growth of the online classifieds advertising market for 2009 and 2010 compared to previously predicted levels. Real estate and automotive classifieds will continue to have the strongest growth through to 2012, with compound annual growth rates of 23 percent and 22 percent respectively. By 2012, automotive classifieds are expected to account for 20 percent of the overall online classifieds advertising market, up from 17 percent in 2008.

General and personal online classifieds advertising, which now accounts for just 10 percent of online classifieds, will continue to experience the slowest growth due to the relative maturity of these markets.

Phil Harpur, ANZ Senior Research Manager, Frost & Sullivan, commented on the results saying:

“The long term trend of steady increases in revenue year-on-year will persist, particularly as spending continues to shift from print to online classifieds. Although online growth is slowing, it’s a much more resilient sector than print or television. Advertising buyers are likely to gravitate towards online given the increasing pressure to maximise returns on their investments. In fact, the economic downturn could actually accelerate the migration of print to online in some industries.”

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