Digital ad market hits record $4.9 billion as seasonal slowdown fades

Australia’s online ad market has recorded its strongest March quarter on record, reaching AU$4.9 billion as digital ad investment continued to broaden beyond major brand advertisers.

The IAB Australia Internet Advertising Revenue Report, prepared by PwC Australia, found total internet advertising expenditure jumped 15.3% year-on-year from $4.2 billion in Q1 2025, despite ongoing economic caution.

The result landed within 1% of the record December 2025 quarter, suggesting the traditional seasonal pullback in the March quarter has largely disappeared.

Video and search led the market, with both segments continuing to attract investment from advertisers looking for scale, measurable performance and audience attention.

Video advertising was the fastest growing major segment, surging 20.4% to $1.4 billion, while search and directories remained the largest category at $2.16 billion, up close to 14% year-on-year.

“Investment in Australian digital advertising remains solid, but the growth is coming from a broader base of advertisers than it used to," Gai Le Roy, CEO of IAB Australia, said.

"While large brand advertisers continue to be important drivers of market scale, we are also seeing meaningful investment from SMEs, commerce-led businesses and new international entrants looking to build their presence in Australia."

All video categories recorded double-digit growth, with social video the fastest growing sub-segment, up 29.4% year-on-year. BVOD grew 10%, supported by high-demand viewing environments and major sporting events.

Video now accounts for 73.2% of total display market expenditure, up from 71.4% in Q1 2025.

Infeed and native formats also performed strongly, growing 13.2% year-on-year to $287.8 million, while standard display increased 7.7% to $129.5 million.

Search and directories grew at their fastest rate since Covid, capturing about 44% of total internet advertising expenditure. The segment added about $264 million in spend year-on-year, rising from $1.90 billion in Q1 2025 to $2.16 billion in Q1 2026.

Classifieds increased 13.9% year-on-year to $787 million and rose 7.4% quarter-on-quarter.

Audio advertising grew 8.3% year-on-year to $83.5 million, with podcasting outperforming streaming audio. Podcasting increased 12.6% to $32.6 million, while streaming audio rose 5.7% to $50.9 million. Total audio was down 11.3% quarter-on-quarter, reflecting the usual pullback from the December quarter peak.

Automotive recorded the largest year-on-year increase in share of general display across industry categories, up 1.7 percentage points. IAB said the lift was driven by spend across BVOD and automotive-oriented platforms, with new Chinese car brands now a visible presence in Australian digital advertising investment.

Retail also increased its share year-on-year, up 1.4 percentage points, although spend eased from the December quarter peak in line with seasonal patterns. Insurance and travel lifted share quarter-on-quarter, while government advertising increased both year-on-year and quarter-on-quarter, linked to federal campaigns around the fuel crisis in February and March.

Health and beauty, entertainment and media, and FMCG recorded the largest year-on-year share declines, consistent with a pullback in household discretionary advertising spending.

The IAB Australia Internet Advertising Revenue Report is compiled by PwC and includes data from media owners, publishers and advertising platforms operating in the Australian market.