Australia's internet advertising market recorded its strongest ever March quarter on May 26, 2026, with total expenditure reaching $4.9 billion in Q1 2026 - a 15.3% year-on-year increase that arrived despite persistent economic caution and marked a near-complete erosion of the seasonal spending dip that has historically defined the opening quarter.

The data comes from the IAB Australia Internet Advertising Revenue Report, compiled by PwC Australia and released on Tuesday 26 May 2026. The report draws on submissions from media owners, publishers, and advertising platforms operating in the Australian market. It measures five format categories: search, classifieds, display (excluding video), audio, and video.

The headline figure of $4.9 billion sits within 1% of the $4.95 billion record set in the December 2025 quarter - a proximity that, according to IAB Australia, signals the traditional Q1 seasonal pullback has effectively disappeared. That is a structural shift worth examining closely, because it suggests advertisers are no longer retreating after the Christmas period to the extent they once did.

Search holds the largest slice, grows fastest since 2022

Search and Directories retained its position as the largest segment of the Australian internet advertising market. Spending in the category reached $2.16 billion in Q1 2026, up 13.9% year-on-year from $1.90 billion in Q1 2025. The segment added approximately $264 million in absolute terms in a single year.

According to the report, this represents the fastest growth rate in search since the 2022 COVID recovery period. Search now accounts for approximately 44% of total internet advertising expenditure in Australia - a share that has held firm even as video's slice of display has expanded dramatically. The consistency of that 44% share is notable; it implies search is growing roughly in line with the total market, rather than ceding ground to newer formats.

For the marketing community, this trajectory carries weight. Search advertising in Australia had already reached $7.6 billion in the full financial year ending June 2025, commanding 44% of the market at that point. The Q1 2026 data shows the segment sustained momentum through the softer opening quarter, adding to a run that has now stretched across multiple consecutive reporting periods.

Video leads every sub-category with 20.4% growth

Video advertising was the fastest growing major segment in Q1 2026, increasing 20.4% year-on-year to reach $1.4 billion. Every video sub-category recorded double-digit growth - a result IAB Australia described as broad-based rather than concentrated in one platform type.

Within video, social video was the fastest growing sub-segment, up 29.4% year-on-year. BVOD - broadcaster video on demand, covering platforms such as 7Plus, 9Now, and 10Play - grew 10.1%, supported by high-demand viewing environments and major sporting events during the quarter.

Video now accounts for 73.2% of total display market expenditure, up from 71.4% in Q1 2025. That is a meaningful shift within a single year: display advertising, once a category built around banner formats and tenancies, is now predominantly a video market in Australia.

PPC Land's coverage of the full-year 2025 Australian internet advertising figures, published in March 2026, had already flagged video as the dominant growth engine for the calendar year - up 19.8% to $5.4 billion - while noting that non-video display crept forward just 1.9%. The Q1 2026 data reinforces that divergence.

A separate IAB Australia survey on video advertising, published on May 6, 2026, found that social video held 40% of total video investment in calendar year 2025, reaching $2.2 billion and growing 35.1%. The Q1 2026 sub-segment growth of 29.4% for social video suggests the pace is moderating slightly from that calendar year peak, though it remains well ahead of every other format.

BVOD, sports, and the January effect

BVOD's 10.1% Q1 growth comes in the context of a market that saw a sharp January audience spike. IAB Australia data released in March 2026 showed over 7.6 million Australians watched BVOD sports programs in January 2026, a 65% jump from December 2025 driven by Australian Open tennis coverage. Total time spent on BVOD sports viewing lifted 139% between December 2025 and January 2026. These audience concentrations create high-demand inventory environments - precisely the condition the IAB Australia Q1 report cited as supporting BVOD growth.

Classifieds, display, and audio

Classifieds delivered $787 million in Q1 2026, up 13.9% year-on-year and up 7.4% quarter-on-quarter. The segment covers automotive classifieds, recruitment, and real estate listings.

Display advertising - excluding video - grew 10.1% year-on-year to $513 million. Within that total, infeed and native formats grew to $287.8 million, while standard display increased 7.7% year-on-year to $129.5 million. Display (excluding video) is lagging the total internet advertising market growth rate of 15.3%.

Audio advertising reached $83.5 million in Q1 2026, up 8.3% year-on-year. Podcasting outperformed streaming audio: podcasting grew 12.6% year-on-year to $32.6 million, while streaming audio increased 5.7% to $50.9 million. Total audio was down 11.3% quarter-on-quarter, consistent with the seasonal decline from the December peak. Australian digital audio advertising had reached $339 million for the full calendar year 2025, according to a March 2026 IAB Australia report, with podcast growth already outpacing streaming audio on an annual basis.

Industry categories: automotive surges, FMCG retreats

Among industry categories measured in the general display market, automotive recorded the largest year-on-year increase in share, up 1.7 percentage points to 14.6% of reported general display. The report attributed this to spend across BVOD and automotive-oriented platforms, and specifically noted that new Chinese car brands are now a visible presence in Australian digital advertising investment. That is a new dynamic. Established domestic and international car brands have historically dominated automotive display; the entry of Chinese manufacturers at measurable scale represents a structural addition to that category's advertiser base.

Retail lifted its display share by 1.4 percentage points year-on-year to 18.4%, making it the largest single industry category in reported general display. One in every three dollars of content publishers' general display inventory was spent on retail and automotive combined in the March 2026 quarter.

Insurance and travel both lifted their display share quarter-on-quarter. Government advertising increased both year-on-year and quarter-on-quarter, with the report linking this to federal campaigns around the fuel crisis in February and March 2026.

At the other end of the table, health and beauty, entertainment and media, and FMCG recorded the largest year-on-year share declines. According to the report, this is consistent with a pullback in household discretionary advertising spending - a pattern that tracks broader consumer caution during a period of cost-of-living pressure in Australia.

Entertainment and media's share declined from 9.9% in March 2025 to 9.0% in March 2026. FMCG fell from 7.4% to 6.5%. Finance held at approximately 8.0%, down from 8.4%.

It is worth noting that the reported general display figures exclude Meta, Google, X, Snapchat, Spotify, TikTok, Pinterest, Amazon, LinkedIn, and Foxtel General Display advertising. The category breakdowns therefore reflect publisher and broadcaster display inventory rather than total market composition.

A broader advertiser base

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

That observation is significant when read alongside the search growth rate. SMEs and commerce-led businesses - which include retailers operating performance-driven campaigns - disproportionately allocate spend to search and lower-funnel formats. The fastest search growth since 2022 arriving at the same time as a wider advertiser base is not coincidental.

Le Roy also flagged a tension in how advertisers are allocating within the market. "Video continues to be the standout performer and search is also accelerating, however the results suggest advertisers are continuing to concentrate spend in a relatively narrow set of environments, despite the important role broader premium content ecosystems play in long-term brand growth and reaching audiences in trusted contexts," Le Roy said.

That tension - between platform concentration and the case for a broader media mix - has run through IAB Australia commentary for several quarters. The full-year 2025 report published in March 2026 had already highlighted that non-video display grew just 1.9% against a market growing 11.5%, pointing to spending concentrated in large platforms at the expense of publisher inventory.

Context: a market that has not slipped since Q4 2025

The $4.9 billion Q1 2026 result, within 1% of the December 2025 record, matters because Q1 has historically been the weakest quarter. Advertisers typically cut spend after the Christmas and New Year period, then rebuild into mid-year. The near-elimination of that dip implies that either the ongoing entry of new advertiser classes - SMEs, international entrants - is filling the gap left by large brands pausing, or that those large brands are no longer pausing at all, or both.

Australia's total internet advertising market reached $18.4 billion in the full calendar year 2025, growing 11.5% - the second consecutive year of double-digit growth. The Q1 2026 result, growing at 15.3%, is accelerating above that annual baseline. The December 2025 quarter had been $4.95 billion, making Q1's $4.9 billion a near-hold rather than the typical step down.

The 15.3% year-on-year growth rate is also notably higher than the 11.5% recorded for full-year 2025 and the 10.6% recorded for the financial year ending June 2025 - suggesting growth is picking up pace in the opening months of 2026 rather than moderating.

Report methodology

The IAB Australia Internet Advertising Revenue Report is compiled by PwC Australia and covers data from media owners, publishers, and advertising platforms operating in the Australian market. The five format categories measured are: search (paid search and search shopping ads); classifieds; display (standard display, native advertising, paid sponsorship content, display ads on email, tenancies, and other); audio (streaming and podcasts); and video (internet video covering publisher, outstream and AVOD, social video, BVOD, video podcasting, and video other).

The general display category breakdowns exclude the major global platforms - Meta, Google, X, Snapchat, Spotify, TikTok, Pinterest, Amazon, LinkedIn, and Foxtel - and reflect publisher and broadcaster inventory only.

Timeline

Summary

Who: IAB Australia and PwC Australia, with Gai Le Roy (CEO, IAB Australia) providing commentary. The data covers media owners, publishers, and advertising platforms operating in the Australian market.

What: The IAB Australia Internet Advertising Revenue Report for Q1 2026 recorded total internet advertising expenditure of $4.9 billion in the March quarter - the strongest Q1 result on record - representing 15.3% year-on-year growth. Video advertising grew 20.4% to $1.4 billion. Search and Directories grew 13.9% to $2.16 billion, its fastest rate since the 2022 COVID recovery. Classifieds reached $787 million, audio $83.5 million, and display (excluding video) $513 million. Social video was the fastest-growing sub-segment, up 29.4%.

When: The report covers the quarter ended 31 March 2026 and was released on Tuesday 26 May 2026.

Where: Australia's internet advertising market, covering all digital advertising formats transacted in the country across search engines, social media platforms, broadcaster video on demand services, audio platforms, and publisher display inventory.

Why: The result matters because the Q1 figure sits within 1% of the December 2025 record, suggesting the traditional seasonal spending pullback has effectively disappeared. Growth is being driven by a wider advertiser base - including SMEs, commerce-led businesses, and new international entrants such as Chinese automotive brands - alongside continued concentration of spend in video and search. The acceleration in growth rate (15.3% in Q1 2026 versus 11.5% for full-year 2025) indicates the market is expanding faster in early 2026 than it did across the prior calendar year.

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