Is Online Business in Australia Yet to Take Off?
Online business may be growing dramatically, but it’s still only scratched the surface.
More explosive growth is still to come.
Mainstream Australian business has been notoriously slow to join the online party, especially retail, yet the growth in online revenue has still been dramatic.
Once the majority gets onboard, online shopping and business is likely to explode in ways we haven’t imagined yet.
At present less than half of Australian businesses have a website, and of those that do only a third do business by it. That works out to roughly only 15% of Aussie businesses actually using the web to sell and deliver goods and services.
Despite this small percentage, online retail sales keep growing at around 30% a year, compared to offline which is almost flat lining at around 2%.
The reason for the gap is because Australian consumers have flocked online en masse, yet business has been painfully slow to follow.
Yet there are signs the situation is changing.
Online Advertising Surpasses Offline Press
Advertising and marketing dollars are also slowly but inexorably moving away from offline channels to online channels.
In the first half of this year online advertising spending surpassed newspaper spending $1.63 billion compared to $1.5billion, according to the Commercial Economic Advisory Service Australia.
It should be noted that this has as much to do with newspapers plummeting ad revenues as online’s soaring ones.
Digital media firms revenue grew between 22 and 43% last year, while earnings for some offline media firms fell by a whooping 45%.
While traditional media - newspapers, TV, radio, magazines - still have a 73 per cent share of the overall $13.5 billion advertising spend in Australia, that's down from 83 per cent in 2009, according to CEASA.
Nor is the situation unique to Australia. As the following graphic shows, newspaper revenue in the US has fallen incredibly over the past seven years, wiping out all the gains they have made in the past half century.
Old Business Models are Broken
The reason is fairly simple: Traditional media’s business model is fundamentally broken and there’s no way to fix it.
In other words the customer has moved on and left many traditional businesses far behind.
Locally one of Australia’s major television stations, Channel 9, was reported to be in deep financial trouble, because of failing ad revenues.
Now, because of their size, it may be a long time before traditional media fade from the spotlight, but the trend should be clear to everyone.
Of course it’s not just offline media that has a broken business model.
Bricks and mortar retailers have been having a terrible time over the past few years, and many of them have stubbornly refused to properly embrace the internet.
That’s a shame because that’s where the people are, that’s where all the growth is and that’s where the money is..
Follow the Eyeballs and Follow the Money
Australians from 16 to 60 are now spending more time per week engaged online than with any other medium.
They are doing more and spending more online and far too many businesses have failed to keep up with them.
The eyeballs and wallets are online but a lot of business isn't.
The fact that traditional media still accounts for 73% of the total advertising spend while online media has the bulk of the audience shows just how far there is to go.
Once more businesses start following their customers online; ebusiness is really likely to really explode.
Watch this space
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