The World: Insider's View - Australia

Australia has more agencies per capita than any other country, but must develop business models to succeed in the online market.

In Australia, we have one of the most saturated mature advertising markets in the world, with more media agencies per capita than any other country. As well as the Australian agencies, it seems that every agency from the UK is here, and there is a start-up every week. So, there are similarities with the UK market, but we are not as advanced in the areas of direct response and data.

When I first arrived in Sydney, online media was in its infancy. Now, less than five years later, the Australian industry has moved rapidly to tackle its slow start. Most good agencies in Australia now view digital as the single most vital part of their business. These changes are probably only possible in Australia. In Europe and the US, agencies are just too big to be flexible.

Both agencies and publishers are filtering the best attributes from the US and Europe and applying them to Australia. Clients are being proactive and innovative by enabling creatives to push the boundaries.

There has been a real turnaround in client thinking and attitude that has provided agencies and publishers with more work, despite a few problems along the way. This is why digital is appealing. In Australia, the digital industry is nowhere near as backward as some people from the UK would like to imagine. I thought that it would be like the Stone Age. Yet with a high number of British people living and working in Sydney and Melbourne, and many Australians having worked in the UK, there's a wealth of experience here.

Digital media is regional in Australia, something that the UK can't really appreciate or comprehend. The geographical size of this country means that you can't travel to clients based in Perth or even Brisbane on a regular basis. Most of the larger agencies now have offices in Sydney and Melbourne, with markets in Perth and Brisbane becoming more alluring as populations increase due to tourism and natural resources.

From a technological and analytical perspective, we are still a long way behind the US and UK. New business models are emerging, however, giving the advertising industry the confidence to change its more traditional approach. This is backed up by a phenomenal growth in online adspend, which was up 30 per cent year on year, according to the Australian Internet Advertising Bureau. Video-based services on broadband and interactive digital TV networks are revealing new opportunities. Personalised media and one-to-one communication will be the predominant mode in digital media.

New models need to be developed to succeed in this highly competitive and customer-service-sensitive market. Video ads in Australia could outpace internet search advertising as the fastest-growing online revenue stream over the next few years.

- Nick Behr is the managing director of Media Contacts Sydney.