16 June, 2017

Aussie Ad Revenue To Top $16bn In 2017: Magna

Blank list with Australian money,calculator and pencil on a table

By Richard McGowan

Australian advertising revenue is expected to grow by 4.7 per cent this year to top $16 billion, according to IPG Mediabrands’ media intelligence and investment division, Magna.

The new Magna forecast is for a lower growth rate than seen in 2016 at 7.8 per cent.

Digital advertising is expected to grow by 13.5 per cent in 2017 to reach $8.4 billion, a strong follow-up to last year’s 24 per cent digital growth.

“The continued strength of Australian digital spend remains impressive given the almost total penetration of internet access and the already high 53 per cent share of digital as a portion of total campaign budgets,” Victor Corones, managing director of Magna Australia, said.

Within digital, the strongest growth comes from video, with 38 per cent growth expected this year to reach $1 billion.

Social media is expected to have the next highest growth at 20 per cent in 2017. This will stem from 26 per cent growth in mobile social advertising spends, but a stagnation in desktop social-media engagement, which Magna expects to decline in the coming years.

The Asia Pacific (APAC) advertising market will grow by 5.6 per cent in 2017 to US$156 billion – marginally ahead of Magna’s previous forecast of 5.4 per cent.

APAC maintains its position as the second largest region for advertising spend, behind North America (US$196 billion). Growth is expected to slow slightly next year to 5.1 per cent.

This year, APAC will see digital becoming the largest share of advertising budgets, representing 37.8 per cent of spend (or US$59 billion) – slightly higher than television’s 37.7 per cent of budgets.

TV will still grow in APAC by 2.2 per cent this year to US$59 billion and will continue to grow through 2021 despite gradually losing share to digital media.

Print media in APAC will struggle in 2017, with newspaper and magazine advertising sales declining significantly at by 7 per cent and 9 per cent respectively. Radio and out of home will still see low to medium single-digit growth, but are also losing share as a percentage of the total advertising pie.

Global advertising revenues are projected to grow by 3.7 per cent in 2017 to US$504 billion. This is in line with Magna’s previous forecast of 3.6 per cent in December last year.

The 3.7 per cent growth rate represents a noticeable slowdown compared to 2016, which achieved record 5.9 per cent growth. This was expected by Magna, as cyclical events such as global sports tournaments (Olympics, UEFA Champions League, Copa America) and the US elections contributed by approximately US$5 billion dollars to 2016 advertising revenues.

Excluding cyclical events, 2016 growth would be 4.9 per cent, and 2017 growth would be 4.7 per cent. The slowdown is thus very moderate and in fact it is mostly concentrated in two markets – the US and the UK.

In 2018, global advertising growth is expected to re-accelerate to 4.5 per cent as even-year events come back including the football World Cup in Russia, mid-term US elections and the Winter Olympics in South Korea.

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