Overview:

This annual publication offers a wealth of information on the trends and developments taking place in the m-commerce and e-commerce sectors. The publication analyses the issues surrounding the growth of e-commerce, including e-banking, e-payments and online advertising. Developments are currently being driven by the emerging NBN and by the explosion in mobile broadband access. Many organisations have announced plans for participation in these opportunities. Information on mobile commerce developments is also given, including m-payments and m-banking, plus statistics and forecasts for both the e-commerce and m-commerce sectors.

Subjects covered include:

• Analysis of key e-commerce trends;
• E-commerce trends and statistics;
• NBN Trans-sector model
• Information on e-payment and e-banking sectors;
• Analysis of key m-commerce trends;
• Advertising  and marketing industry update
• Prepaid payment market
• M-Commerce developments and projects

Executive Summary

Digital marketing, advertising and revenue set to expand into 2011

The initial impact of the global financial crisis has passed and we are now tuned in to the positive outcomes that new infrastructure developments can bring.

In Australia these new developments include the shift to the National Broadband Network (NBN), a high-speed internet national backbone infrastructure that will underpin a range of positive social and economic developments using the digital economy. Preparation for NBN participation is now well and truly underway, with many organisations increasing their investments to enable them to participate in the opportunities it will create.

There is also evidence that overseas companies are interested in using the NBN as a test bed for new products and services they want to develop for global markets. Among the companies who have already indicated they are working on NBN opportunities are Telstra, iiNet, Internode, Optus, Macquarie Telecom, NEC, Google, PayPal, Salmat, Seven Media, Foxtel and Austar, as well as the healthcare, education and energy sectors.

E-commerce will benefit from improvements in infrastructure and a trans-sector approach to governance. E-government, e-health, e-education, social media and e-science are also important elements of a digital economy.

In this publication we provide the latest industry insights and information on the e-commerce and m-commerce sectors. Selected information is also included on the leading trends in this sector in Australia, plus a brief overview, with some valuable observations, of the global market.

Spending on advertising using digital media channels will grow to around 15% of overall worldwide advertising spending in the next couple of years. While the economic downturn initially impacted on the growth of overall advertising spending, in 2011 there are signs of recovery with online advertising continuing to grow and the ever popular TV advertising rebounding. In Australia online advertisements are growing by 21% while TV advertising revenue grew by 19% in 2010.

Digital marketing remains a growth area, as marketers move towards new advertising methods at the expense of traditional formats. This publication supplies an analysis of the digital media market, focused on two of the key digital advertising platforms, internet and mobile.

Online spending that is directed towards international purchases varied between 3%-50% of the total spend – in 2010 overall estimated online spending by households was only 3%.

But in early 2011 about 25% of mobile users were shopping online using their mobile, with eBay reporting that an item is bought from a mobile every 15 seconds. The online economy is booming for some – online market revenues increased by up to 40% during 2010.

This report identifies the primary areas that customers are interested in, which are therefore significant commercial starting points. It looks at topics about buying/selling over the internet and at some of the players; and it provides statistics in tabular and chart formats.

In 2011 the main form of online payment continues to be via credit and direct debit cards. The financial institutions have been more interested in protecting their incumbent businesses than in seriously embarking on e-payment developments. PayPal has established itself as the most advanced e-payment system outside the banks. With its online payments increasing by more than 20% that company has become the market leader.

We report on off-deck payment systems using mobile phones – these constitute another fast-growing market, as do calling cards.

In 2010 the total revenue from electronic payment systems for mobile services in Australia was estimated at around $3.8 billion. This market segment in Australia is dominated by epay, with the major banks and mobile operators commanding smaller shares. Prepaid mobile voice services are the largest revenue segment, followed by calling-cards, prepaid mobile internet access, music purchases and gift cards, as well as Premium SMS services. The market is rapidly developing, following the arrival of rechargeable magnetic cards.

Significantly, Australian mobile operators expect to further increase revenue earned from sales for prepaid mobile internet access in 2011. The emerging prepaid electronic transport ticketing services is another growth market.

Key performance indicators of the e-commerce, marketing and advertising markets – 2010

Market highlights:

• Spending on advertising using digital media channels is moving towards 15% of overall worldwide advertising spending.
• The economic downturn impacted upon the growth of overall advertising spending in 2009 but recovered successfully in 2010.
• In early 2011 about 25% of mobile users are shopping online with their mobile, with eBay reporting that an item is bought from a mobile every 15 seconds.
• PayPal has over 5 million active users and around 18,000 merchant customers in Australia.
• In 2010 the total revenue from electronic payment systems in Australia is estimated at around $3.8 billion.
• Prepaid mobile voice services are the largest revenue segment, followed by calling-cards, prepaid mobile internet access, music purchases and gift cards, as well as Premium SMS services.

1. Key Elements of a Digital Economy
1.1 Infrastructure essential for the digital economy
1.2 Can we fast-track the digital economy?
1.3 Key sectors for the digital economy
1.3.1 Background information
1.3.2 Smart grids and the environment
1.3.3 E-commerce
1.3.4 E-government
1.3.5 E-health
1.3.6 E-education
1.3.7 E-science
1.3.8 Social media
1.4 Key requirements of the digital economy
1.4.1 Broadband
1.4.2 Trans-sector approaches
1.4.3 Open access
1.4.4 Internet neutrality
1.5 Conclusion: digital economy services
2. E-Commerce and M-Commerce Insights
2.1 Market summary
2.1.1 Global e-commerce market
2.1.2 Global m-commerce market
2.1.3 Security still a key issue
2.2 Market insights
2.2.1 Underlying trends
2.2.2 E-payments
2.2.3 M-commerce/M-payments
2.2.4 Internet banking (E-banking)
2.2.5 Evolving e-commerce business models
2.2.6 Internet based content still relies on advertising
2.2.7 Cloud computing and e-commerce
2.3 Case studies
2.3.1 E-commerce in the USA
2.3.2 M-commerce in the USA
2.3.3 E-commerce in China
2.3.4 M-commerce in China
2.3.5 FeliCa in Japan
3. Advertising and Marketing Insights
3.1 Market summary
3.2 Market insights
3.2.1 Consumers will lead the way
3.2.2 Changes in internet advertising
3.2.3 Mobile advertising
3.2.4 Mobile Location-Based Advertising (MLBA)
3.2.5 TV advertising
3.2.6 Hulu
3.3 Key online advertising categories
3.3.1 In-game advertising
3.3.2 Social media advertising
3.3.3 Online videadvertising
3.3.4 Online search advertising
4. National Broadband Network – Trans-sector Model
4.1 Analysis late 2010
4.1.1 National plan for the digital economy
4.1.2 First release site – trans-sector test sites
4.2 Trans-sector awareness update 2010
4.2.1 2010 election puts focus on trans-sector
4.2.2 Sectors are starting tunderstand the benefits
4.2.3 Commitment from Prime Ministers
4.2.4 The National Broadband Network (NBN) can pay for itself
4.3 E-services in the context of national broadband
4.4 Introduction ttrans-sector thinking
4.4.1 Fragmented society requires cohesive leadership
4.4.2 Problems in most silos
4.4.3 National welfare depends on new ways of thinking
4.5 A matter of leadership
4.5.1 Obama’s leadership - a catalyst for change
4.5.2 Work in progress: political leadership
4.5.3 Trans-sector thinking at highest levels in Australia
4.5.4 Towards trans-sector government
4.6 Barriers tbroadband adoption
4.7 We lack the structures timplement trans-sector visions
4.8 Multiplier effect for the NBN
4.9 Trans-sector regulation
4.9.1 Regulations need tbe rewritten
4.9.2 Fibre-to-the-Home (FttH) will change telecom models
4.9.3 Utilities-based regulation
4.9.4 Removing blockages
5. E-Commerce
5.1 Trends and statistics
5.1.1 The key drivers of growth
5.1.2 Market analysis
5.1.3 Market statistics and surveys
5.1.4 The online marketplace
5.2 E-payment
5.2.1 E-payment – analysis
5.2.2 Service providers
5.2.3 Micropayment developments
6. Prepaid Payment Market
6.1 Introduction
6.2 Major players in Australia
6.2.1 Overview and statistics
6.2.2 epay Australia
6.2.3 Web-based service providers
6.3 Retail outlets
6.4 Revenue overview
6.5 Market developments update – 2010
6.6 E-payment charging models
6.6.1 Card and PIN (scratch cards)
6.6.2 PIN-based systems
6.6.3 Rechargeable calling-cards (swipe cards)
6.6.4 Other recharge models
6.7 New markets
6.7.1 Electronic gift cards (open loop cards)
7. M-Commerce
7.1 Overview and analysis of m-commerce in Australia
7.1.1 Introduction
7.1.2 Development of m-commerce in Australia
7.1.3 Research indicates consumers wary of telcos for payment options
7.1.4 Apps need m-payments
7.1.5 Developments in Australia
7.1.6 Closed systems
7.2 M-payment projects and services
7.2.1 mHITs
7.2.2 Visa’s payWave service for the National Australia Bank (NAB)
7.2.3 MasterCard PayPass
7.2.4 Near Field Communications (NFC)
7.3 Mobile banking (m-banking)
7.3.1 M-banking overview
7.3.2 Commonwealth Bank of Australia (CBA)
7.3.3 Australia and New Zealand Bank (ANZ)
7.3.4 National Australia Bank (NAB)
7.3.5 Westpac
7.3.6 Public transport
7.4 Other m-commerce developments
7.4.1 SMS m-commerce
8. Advertising and Marketing Industry
8.1 Digital economy – Internet income
8.2 The online advertising market
8.2.1 Interactive Advertising Bureau (IAB) survey of online advertising expenditure – 2010
8.2.2 Revenue trends from 2010 int2014
8.2.3 Moving int2011
8.3 Mobile Internet advertising
8.3.1 Background
8.3.2 Insights intmobile advertising trends
8.3.3 Mobile advertising tmature
8.4 Generation Y is driving the online media push
8.5 Revenue statistics
8.5.1 Online advertising revenue forecasts
8.5.2 Online advertising revenue statistics
8.6 Online classified advertising
8.6.1 Overview of market spending – 2010
8.7 Online videadvertising market
8.7.1 Market overview
8.7.2 Videgaming industry downsizes
8.8 Website usage statistics
8.8.1 Election 2010 website visits
8.8.2 Top 10 Australian websites – 2009 - 2011
8.9 Market surveys
8.9.1 Online shopper survey – customers still buying offline
8.9.2 Children and the usage of social networks
8.9.3 Ericsson/IDC – rapid growth for TV/videsector
8.9.4 Online general advertising survey
8.9.5 PricewaterhouseCoopers (PwC) Entertainment & Media Outlook report t2012
8.9.6 Search advertising revenues
9. Glossary of Abbreviations

Table 1 – Worldwide telecom statistics at a glance – 2011
Table 2 – Visitors ttop fifteen web properties worldwide – 2009 - 2010
Table 3 – Worldwide transaction value of m-payments – 2008; 2012 - 2013
Table 4 – Number of consumers worldwide using m-payment services – 2008 - 2012
Table 5 – Worldwide transaction value of NFC m-payments – 2009; 2012
Table 6 – Number of mobile banking users worldwide – 2008; 2014
Table 7 – Number of mobile banking users – Asia-Pacific; North America and Europe – 2014
Table 8 – Mobile banking users in the USA – 2007; 2009
Table 9 - Worldwide advertising spend versus online advertising spend – 2009 - 2010
Table 10 - Most popular formats for receiving news in the USA – 2010
Table 11 – Fastest growing e-commerce sectors in the USA – 2008 - 2010
Table 12 – Online retail sales and annual change in the USA – 2003 - 2010
Table 13 – Mobile banking users in the USA – 2007 - 2010
Table 14 – Breakdown of e-commerce users in China – 2009
Table 15 – Estimated value of B2C e-commerce market in China – 2005 - 2011
Table 16 – Estimated value of C2C e-commerce market in China – 2005 - 2011
Table 17 – Worldwide advertising spending- all mediums – 2008 - 2012
Table 18 – Worldwide online advertising spending – 2007 - 2012
Table 19 – Most popular forms of online advertising
Table 20 – Western Europe mobile ad spending – 2009 - 2012
Table 21 –Asia-Pacific mobile ad spending – 2009 - 2012
Table 22 – Growth of Hulu videstreams – various months – 2008 - 2010
Table 23 – Worldwide in-game advertising spending – 2007 - 2009; 2013
Table 24 – Worldwide social network advertising spending – 2008 - 2010
Table 25 – USA social network advertising spending – 2008 - 2009
Table 26 – US online advertising revenues - top four portals – 2008 - 2011
Table 27 – Selling over the Internet by industry sector – 2010
Table 28 – Mobile transactions on eBay by phone type – 2010
Table 29 – Mobile transactions on eBay – 2010
Table 30 – Estimated market share – electronic mobile payments of total prepaid – 2002 - 2010
Table 31 – Major electronic payment providers and estimated market share – 2010
Table 32 – Estimated electronic payment market revenues – 2007 - 2011
Table 33 – Estimated breakdown of prepaid electronic payment market revenues – 2009
Table 34 – Market shares of key online advertising markets – 2008 - 2011
Table 35 – Nielsen Online top Australian websites by unique audience – 2009 - 2010
Table 36 – Top ten Australian websites by unique audience – 2009 - 2011
Table 37 – Social networking in the workplace – 2009 - 2010
Table 38 – Australian entertainment and media market – revenue by industry – 2007 - 2012
Table 39 – Australian entertainment and media market – annual growth by industry – 2008 - 2012
Table 40 – Australian consumer/end-user spending – 2007 - 2012
Table 41 – Australian consumer/end-user spending – annual growth by industry – 2008 - 2012
Table 42 – Australian advertising spending – 2007 - 2012
Table 43 – Australian advertising spending – annual growth by industry – 2008 - 2012
Table 44 – Australian entertainment and media market – revenue by industry – 2006 - 2008; 2011
Table 45 – Australian entertainment and media market – annual growth by industry – 2007 - 2008; 2011
Table 46 – Australian entertainment and media market – consumer/end user spending by industry – 2006 - 2008; 2011
Table 47 – Australian entertainment and media market – consumer/end user annual growth by industry – 2007 - 2008; 2011
Table 48 – Australian entertainment and media market – advertising spending by industry – 2006 -2008; 2011
Table 49 – Australian entertainment and media market – advertising annual growth by industry – 2007 - 2008; 2011
Table 50 – Share of consumer spending by industry sector – 2006; 2011
Table 51 – Share of advertising revenue by industry sector – 2006; 2011

Chart 1 – Top five uses of the Internet by businesses – 2008 - 2010
Chart 2 – Top five uses of mobile Internet – 2009 - 2010
Chart 3 – Percentages of businesses online – 2008 - 2010
Chart 4 – Top five items bought by SMEs using the Internet – 2008 - 2010
Chart 5 – Business Internet customers by location – 2008 - 2010
Chart 6 – Internet selling by SMEs – 2008 - 2010
Chart 7 – Estimated coupon website revenue - 2010 - 2014
Chart 8 – The growth of eBay members in Australia – 1999; 2003 - 2004; 2006; 2009 - 2010
Chart 9 – E-readiness and digital rankings of Australia – 2007 - 2010
Chart 10 – Business Internet income – 2007 - 2011
Chart 11 – Mobile online advertising revenue – 2008 - 2011
Chart 12 – Online advertising expenditure and forecasts – 1997 - 2015
Chart 13 – Online advertising expenditure in the email and videsector – 2009 - 2011
Chart 14 – Visitors ttop news websites for election coverage – 2010
Chart 15 – Use of price comparison sites – 2010
Chart 16 – Use of social networking sites by demographic – 2008 - 2010
Chart 17 – Social networking trends among children – 2008 - 2010
Chart 18 – Paid search advertising revenue – 2005 - 2006; 2010

Exhibit 1 – Faster broadband speeds offer more than just fast internet
Exhibit 2 – Explanation – optical fibre
Exhibit 3 – Selected examples of countries with planned ICT infrastructure investment
Exhibit 4 – Digital economy – key developments
Exhibit 5 –Popular online activities
Exhibit 6 – M-Commerce – key developments
Exhibit 7 – Overview of PayPal
Exhibit 8 – M-PESA
Exhibit 9 – Money transfer services
Exhibit 10 – Definition: Cloud computing
Exhibit 11 – Amazon Web Services
Exhibit 12 – Subway introduces SMS ordering
Exhibit 13 – China’s dominant e-commerce site
Exhibit 14 – Digital advertising cost considerations
Exhibit 15 – Examples of large global advertising groups and subsidiaries – 2010
Exhibit 16 – Examples of digital advertising agencies
Exhibit 17 – Top sectors for online advertising spending
Exhibit 18 – Online ad deal between Google and Yahoaborted
Exhibit 19 – Anarchy Online by Funcom
Exhibit 20 – Facebook and Nielsen’s marketing alliance
Exhibit 21 – Economic effects of trans-sector broadband
Exhibit 22 – Online users and other media usage
Exhibit 23 – Example items sold on average in Australia on eBay
Exhibit 24 – Interesting items from online auctions
Exhibit 25 – BPAY – company overview 1997; 2010
Exhibit 26 – Overview of Google Checkout
Exhibit 27 – PayPal – other developments