In previous posts about NZ online advertising I’ve lamented the fact we’re so far behind the 8 ball compared to Australia & UK where roughly 25% of total advertising spend is spent online.

And most of that on search marketing!

Despite this, the good news is that in New Zealand the share of advertising spend invested in online advertising has  gradually been increasing.

Last year the IAB predicted that online advertising would finally climb into double digits and account for a 10% share on NZ total advertising spend  by the end of 2009.

The New Zealand IAB will shortly be releasing final figures for 2009 and the big question is, are they right?

Will online account for 10% of total NZ adspend?

Interest is high & the IAB are running a poll on their website asking people how confident they are that online advertising will take a 10% share on ad spend in NZ.

As you can see at this point (26 Jan) it looks like the overwhelming view is that it will.

Being an anonymous poll I’m of course not going to reveal how I voted.

What do you think – yes or no? Comment below and vote in the poll which is here: IAB poll

In a recent posting I celebrated the fact NZ online advertising spend continues to grow & that paid search is now the major component.

However compared to Australia, NZ is still well behind the curve in terms of adopting online marketing.

According to latest IAB figures NZ online spend accounts for only 8% of total advertising spend, whereas in Australia it is around 25%.

The difference in the NZ & AU markets is very obvious when paid search spend is examined.

• In NZ paid search for the year ending June 09 was only NZD$67 million (36% of total online spend).

• In stark contrast paid search spend for the same period in Australia was AUD$884 million (49% of total online spend).

• Reduced to a per capita basis, Australian paid search spend is AUD $42 per person. By comparison NZ’s is only AUD $13.  So proportionately the Aussies are spending 3 x more than we are in NZ.

Damn, I hate it when the Aussies beat NZ!

In a recent post I mentioned recent IAB figures which showed for the first half of 2009 New Zealand TV advertising revenue plummeted 13%, while, in stark contrast, online advertising grew 7% compared to last year.

This may have been a shock to some media planners & buyers.  Especially those who to date have given little, if any, attention to online. No one likes their world turned upside down, so some may even be in denial & view this as a short term aberration due to the recession.

I don’t think so!

Most people acknowledge UK is a couple of years ahead of NZ on the online curve & generally what happens there is a pretty good indicator of things to come in NZ.

Whilst things have been tough enough in NZ, the recession has been much worse in UK. As a result the UK advertising industry has really suffered, with a £1.5 billion reduction in total media spend. Despite this, online advertising has continued to grow because of its performance accountability.

The real bombshell however is that, for the first time ever, more money is being spent in UK on online advertising than on TV!

That is pretty astounding & makes UK the first major economy to see online spending overtake television.

As the above table shows, UK’s growth in online advertising has very clearly been lead by paid search.

In NZ paid search is now the biggest online advertising channel & accounts for 36.3% of all online spend. However to put this in context, according to the IAB, paid search in UK accounts for 62.6% of all online spend.

Begs the question – when will that happen here? My money’s on it being within 2 years.

It looks like even the search colossus Google isn’t immune to the impact of the global recession.

Despite earning a staggering $4.2 billion on revenue of $21.8 billion last year Google is now aggressively trimming expenses to protect profits & stop its stock price from falling further.

Since January Google has eliminated outside contractors; curtailed some of the employee perks they’re famous for; & canned services that weren’t paying off, like their foray into radio advertising.

Google’s huge growth in revenues has fueled significant growth in the last couple of years with headcount jumping to almost 21,000 employees, compared to 10,674 at the end of 2006.  But now to further reduce costs Google has  started laying off staff & consolidating some offices.

Google’s announcement last week that it’s laying off 200 sales & marketing staff globally came as a surprise, given this is the part of the business responsible for generating advertising sales which reportedly account for 97% of Google’s revenue.

Disappointing is the fact that this decision has impacted on the Australian & New Zealand operations. Apparently the Melbourne office is being closed & the New Zealand office staff of 8 cut back significantly.

The Google NZ team is a great group of highly committed & talented people who’s efforts have undoubtedly played a key part in the significant growth of search marketing in New Zealand. Search has taken off since Google established a local office & the level of agency support we’ve experienced has been outstanding.

If Yahoo had a similar presence in the NZ market they’d no doubt be getting a far bigger share of the search cake.

According to the latest Hitwise figures Google has 92.52% of the total NZ search volume share whilst Yahoo has just 3.1% & Microsoft even less at 1.14%.

Sure, there’s much more to Google’s dominance than just having great people on the ground, but it’s certainly played a part.

Our best wishes & sincere thanks go to the local Google NZ team. Thanks guys, you’ve been terrific.