12 Reasons for Australian Retailers to advertise online

Posted by Lucy Halliday On December 03, 2010 Media Releases

Article by Paul Fisher. First published in AdNews, December 3rd 2010

David Jones is now online (again) after a seven year absence! Westfield is launching its online shopping ‘portal’. Why are these two Australian retail icons venturing back online after such a long absence? And why do it now?

There are probably a number of reasons – all best known to their internal and media strategists.
What I really want to know is if these bold new ventures into an online world are very different from when both of them were online previously. And will they be supported by another bold move – into online advertising?

Gets me asking out loud, why should they, and every other retailer for that matter, advertise online?
The answer is pretty straight forward on many counts – let’s start with twelve reasons.

First off – because there are 17 million Australians, online, 14 million of who are classified as ‘active’ by Nielsen NetRatings – that is they were online at least once in the previous 30 days.

Secondly because according to Nielsen those Australians are spending 34% of their total media time, online.

Thirdly because online advertising is the fastest growing Australian advertising medium. When you compare growth in the first half of 2010 with the first half of 2009, Australia is the second fastest growth market in the world, second only to Spain, and growing faster than the UK, US and all other EU markets.

Fourth – acccording to PriceWaterhouseCoopers’ Media and Entertainment Outlook 2010 – 2014 report, online advertising is forecast to grow at a compound annual growth rate of 15.4 percent every year for the next four years. While the same forecast for print growth is 1.9 percent and for free TV is 3.9 percent.
The PwC report forecasts Australian advertisers will spend more on online advertising than in print or TV by 2014, exceeding $3.8 billion.

Fifth – because Australians watched 970 million videos online in July 2010 according to Comscore. An average user watched over 7 hours of video online in that month.

Nielsen recently published research showing 78 percent of Australians had watched video online on their computer at least once in the previous 30 days, with 32 percent of them watching video online more than once a day. 59 percent of those surveyed had watched a video on their mobile phones in the previous 30 days and 49 percent had watched a video on a mobile devise other than their phone (eg iPod Touch, Sony PSP).

Sixth – because 96 percent of online Australians aged 18+ have ever purchased online and 74 percent bought something via the Internet in the last 30 days (‘active’ online shoppers), according to the latest research by Nielsen Online.

Or (seventh), maybe to take advantage of the generational revolution that is social media, with three out of every four Australians online visiting a social media site in June, also according to Comscore.

Or (eighth) maybe they can see from the IAB/PwC online advertising expenditure report that 51 percent of all online advertising is spent on search and directories; 28 percent is spent on display advertising. It’s also at this point that I shine the spotlight on the paltry 4 percent of the $550 million spent in FY2009/10 on display advertising by the retail sector. That’s a mere $22 million! Contrast this with expenditure well in excess of $2.5 billion in print and free TV. This just screams opportunity for the major retailers.

Their global counterparts have already seized on this opportunity as they invest substantially more dollars, pounds and Euros into online advertising and an ever growing share of their media budget.

Ninth, because a global brand with a multi-billion dollar budget, such as Unilever, is doubling its global investment in digital marketing (having doubled it from the previous year already). Why? Keith Weed, Unilever’s global CMO says the company’s decision to innovate in digital is as a result of… “…needing to fish where the fish are, not because they love digital”.

Tenth, which is closer to home, Jetstar announced it was moving 40 percent of its total marketing budget into digital media.

Eleventh, they might look at the recent cross-media advertising effectiveness study published by the IAB in partnership with Colgate Wisp that showed significant uplift in brand metrics and intent to purchase when online is added to TV and print media activity.

Or (twelfth) they might ask their agency to show them how shaving 10 percent off their TV TARPs weight, and allocating the budget that equates to, can gain them 15 percent incremental reach at a higher frequency and lower effective cost per thousand.

Or maybe none of these reasons is compelling enough.

Maybe the single reason they should now invest in online advertising is simply because it works. The facts certainly seem to suggest this much is true.

Lucy Halliday