The online search market will continue to outpace the online directories market over the next five years, according to new research by consulting firm Frost & Sullivan.
The report, titled Australian Online Search and Directories Market 2010, reveals the online search market accounts for 73% of revenues, compared to 27% sourced from directories.
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The search market is expected to grow at a compound annual growth rate of 16% between 2010 and 2015, compared to a predicted rate of 8% for the directories market.
According to the report, Australia’s online search and directories market continued to be dominated by Google and Sensis respectively during 2010, with each having about 90% share of expenditure in their segments.
However, competitive activity is increasing in the market following the 2009 launch of the Bing search engine, the re-positioning of Yahoo! Search Marketing and the emergence of online directories such as TrueLocal and Hot Frog.
According to the report, another notable trend in 2010 was the rapid development of the mobile market for both online search and online directories.
The report states: “Although revenues from directories on mobile devices is still a negligible component of the overall online directory market, very high uptake is predicted once a critical mass of smart phones reaches the Australian market in the next one to two years.”
Phil Harpur, senior research manager, Frost & Sullivan says the boundaries between online search and online directories are becoming increasingly blurred.
“As a result, the search market is increasingly encroaching on online directory territory. At the same time, search functionality is being continually improved and refined,” Harpur says.
“Online search advertising remains the stand-out growth segment of the online advertising industry.”
“The percentage of users whose first port of call is a search engine rather than a directory is increasing and the willingness of advertisers to pay for listings continues to decline.”
Harpur says start-ups should spread their online advertising budget across both platforms as they’re both relatively cheap.
“A lot of people will bypass directories and go straight to search. Search is the most important, but you can basically get in for nothing with directories so you should have both,” he says.
“Also, if you list on a directory it can be picked up by Google, so it’s not an either-or [decision].”