Online advertising expenditure is set to surpass television spending within 12 months after it broke through the $3 billion barrier for the first time.
The Interactive Advertising Bureau has reported online advertising for the 2011-12 financial year reached $3.14bn, eclipsing the previous record by more than $549 million.
The 21 per cent jump also included $47.4m in mobile advertising, which the IAB reported for the first time.
The figures, compiled by PwC, included estimates for Google and Facebook.
IAB chief executive Paul Fisher said the figures showed that online advertising would surpass television expenditure next year, while print (the largest sector) would be eclipsed in 2014.
"This report captures the truest picture of the online advertising industry in Australia with the inclusion of methodical estimates for Google and Facebook, and the inclusion of mobile advertising," Mr Fisher said.
"As marketers and media buyers seek to reach, engage and influence fragmenting audiences in a challenging economic environment, this data should underpin their budgetary decisions to grow their investment in online advertising."
He warned that although the industry would break through the $4bn mark next year, the pace of growth would continue to slow.
Total online spending grew just 6 per cent between the first and second quarters this year, while classified spending flatlined.
However, over the full year, search, the biggest sector of online advertising, experienced a spike in growth, rising by 30 per cent to $1.64bn.
Directories rose by 15 per cent, while general display and classifieds lifted by 11 per cent.
Mr Fisher said that even though search dominated online advertising spending, there was still room for growth.
"I do think there is a lot of money that can be put into search," he said.
"It is the old adage: the dollars follow the eyeballs."
The emergence of mobile advertising as a new force was aided by the wide availability of smartphones and tablets.
Smartphone advertising accounted for 67.7 per cent of ad revenue on mobiles while tablets accounted for 32.3 per cent.
The sector has been growing at 200 per cent and Mr Fisher said more and more advertisers and media buyers were investing in the platform.
One of the next big challenges was the development of a measurement system for mobile advertising, Mr Fisher said.
"We are looking at mobile audience measurement.
"I think there are a couple of big challenges and advertisers are waiting to see better measurement," he said.
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