ONLINE advertising has defied expectations that the financial crisis would also crimp its growth, with annual spending to December up 27 per cent from a year ago to $1.7 billion.
And while advertising in traditional media fell off a cliff in the December quarter it remained strong online, growing 22 per cent to $462 million over the same quarter last year.
That performance, recorded in the audited industry figures released by the Interactive Advertising Bureau today, came despite most analysts predicting growth would halve.
Overall, the growth in online ad spend was slightly lower than the 34 per cent recorded in 2007. But internet advertising was not totally immune from the malaise infecting traditional media, Interactive Advertising Bureau chief executive Paul Fisher said.
"This quarter we've just reported is very good. I was optimistically anticipating 20 per cent growth (for the last quarter) but I thought it could have been mid to high teens. It's been a very poor January and a very flat February but they're optimistic about March, according to some of the major publishers and networks that I've heard from."
Mr Fisher predicted total growth would slow this year to 17-18 per cent, which would still push it above $2 billion for the first time. "I think this quarter will grow in the high teens, increasing to about 20 per cent in the June quarter."
Classified advertising was the only sector in which spending slowed notably in the quarter, reflecting the slowdown in employment advertising, but for the year it still rose 23 per cent to $439 million.
For the three months to December, classifieds grew 10 per cent year on year to $108 million, but that was $6 million (5 per cent) less than advertisers spent in the three months to September.
Search remains by far the largest online ad market with almost one in two dollars being directed to search marketing and online directories.
It continued to outpace the total market as it was up 30 per cent to $807 million for the year as advertisers continued to demonstrate faith in accountable media. However, that was almost half the rate of growth in 2007, when search grew 56 per cent.
Search giant Google refused to say if search advertising had suffered the same slowdown seen this year in other media.
"We're continuing to see growth in our medium and we feel there is strong potential for growth in the Australian market," general manager for Australia and New Zealand Karim Temsamani said.
"We're continuing to grow at a very good rate."
Online display advertising was surprisingly resilient, growing 24 per cent in the quarter compared with 2007 and up 27 per cent from a year ago to $465 million.
Publishers are reporting new advertisers in categories such as retail, packaged goods and alcoholic beverages -- traditionally small sectors for the industry -- are beginning to use the medium.
Strong growth in performance advertising, which is generally paid for when a user performs an action rather than on the size of the total audience, is believed to be driving growth in the general advertising sector.
Liam Walsh, managing director of the Drive performance network, estimated the sector accounted for one in four general display advertising dollars spent online, but expected that to grow.
"Our financials clearly indicate this segment is growing significantly faster than the general category," he said.
"Drive recorded a 35 per cent uplift from the September quarter versus an overall general display growth figure of 4 per cent. In short, performance advertising enjoyed a very good year. It will have another good year as the economy tanks and performance advertising moves from commodity to high valued asset."
He said the IAB report should break out the share of major publishers compared with the so-called "long tail" of low-cost advertising booked on niche sites, most of which is placed by advertising networks.
Mr Fisher said the IAB was in the process of reviewing how it would break out the figures in future, with online video and lead-generation (such as email) advertising on the agenda, as well as performance.
Meanwhile, News Digital Media chief executive Richard Freudenstein said he was "still very optimistic" that internet advertising would continue to grow strongly this year.
"It's very measurable. Twenty-two per cent would be a good result. You've got to expect that given the economic climate, growth will slow down."
Despite the global financial crisis, financial advertisers increased online advertising levels, boosting their share of spending from 18.2 per cent of the market in the December 2007 quarter to 21.3 per cent in the fourth quarter of last year.
Automotive advertising decreased notably from 14.7 per cent to 13.6 per cent, but the biggest slowdown came from computer and technology advertisers, whose share fell from 17.8 per cent to 14 per cent.
