Online classifieds and display advertising took a dive in the September quarter, with search and directories remaining as the saving grace of the sector which saw growth overall of 3.3% to $466.25m from the same period in 2008.

Search and directories’ share of the online ad pie remained strong in the three months to September, growing 12% to $237m year-on-year, to comprise 51% of total expenditure, according to the Interactive Advertising Bureau’s (IAB) Online Advertising Expenditure Report.

In comparison, the report, compiled by PricewaterhouseCoopers, showed online classifieds fell 5% in the September quarter, compared to the same period in 2008, to be worth $108m, or 23.2% of the total. Likewise, general display, which included online video, cost-per-thousand and direct response or “performance” advertising for the first time, plunged 3.8% to $121m year-on-year. General display accounts for 25.9% of total spend, with CPM advertising making up 75% of the display market and performance, 22%. The finance, computers and communications, and motor vehicle sectors dominate spend in this sector, according to the IAB.

Despite online spending slowing in the classified and display markets last quarter compared to a year earlier, the sector posted record quarter growth of 3.3% to $466.25 year-on-year, an increase of $15m, and also saw spend rise 2.9% ($13.25m) from the June quarter this year.

In comparison, ad revenue across traditional media industries including television, radio and newspapers nose dived by 8.5% in the first half of the year, according to figures from the Commercial Economic Advisory Service of Australia (CEASA).

Paul Fisher, CEO of IAB Australia, said the online ad market continued to impinge on advertisers’ investment in traditional media.

“Online advertising is gaining a greater share of the $13 billion Australian advertising industry as marketers and their agencies continue to invest their advertising budgets where they have the most confidence,” he said.

“With continued industry developments in online audience measurement, research demonstrating the effectiveness of online advertising in influencing consumers’ purchasing decisions and behaviours, and maturing self-regulatory standards and best practice guidelines, online is now a trusted, core and essential component of effective marketing communications.”

Fisher, who spoke recently at the Australian Interactive Media Industry Association’s (AIMIA) Digital Media Summitin Sydney, said he expects the online industry to take away over a billion dollars from traditional media over the next four years, to be worth about $3.75bn, or 23% of advertisers’ total media budgets. At last count, the IAB estimated the online ad industry to be worth $1.8bn.

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