Australia’s domestic media businesses will be thrown into the pit to fight for a constantly-shrinking advertising spend as the dollars keep heading overseas, according to Morgan Stanley.
It seems when it comes to major broadcasters as well as the magazine and newspaper companies, total ad spend is on a downward spiral, instead jumping overseas instead, something Morgan Stanley calls “global leakage”.
“Where eyeballs go… we predict ad spend will follow,” wrote the Morgan Stanley team in a recent note to clients, according to Business Insider, before outlining some trends expect for various media platforms.
Morgan Stanley argues that as people allocate increasing amounts of their limited time to online media, the dollars will inevitably follow.
But aside from the predicted growth in ad spend online, outdoor advertising and, to some extent, domestic television networks, could be in for a win, according to the team. However, Morgan Stanley Australia analysts Andrew McLeod, Mark Goodridge, and Elise Lansky, along with their international colleagues Brian Nowak and Kevin Liu, believe the overall outlook has “profound negative implications for … traditional media companies”.
“Let’s say total ad spend stays approximately the same as a percentage of the total Australian economy… then the more ad spend moves to the Internet/online … the more ad dollars will be leaking to global media/ad tech players, such as Google and Facebook, which dominate that space,” they said.
“This is great for them, but not so great for the domestic Australian media companies. Why? Because the pool of ad dollars left over, which becomes the addressable market for which the domestic media companies, has by our estimate stopped growing and started to shrink.
“Looking forward… what is worrying for domestic media companies is the severity of global leakage, or crowding out, which will likely increase as Australian corporates shift their ad spend online, where global media/ad tech players dominate.”
Per BI, these are the big trends expected for Aussie media companies and associated ad spend:
1. By 2020, it’s thought that Aussies will spend just 20 minutes per week with magazines, and ad spend will sit around $200 million.
2. Newspaper revenue is predicted to drastically drop, with the industry raking in less than a billion dollars by 2020, a bad sign given it was over $4 billion just a decade prior.
3. All those fandangled digital screens hanging about outside, and all those videos playing in airport lounges and train stations, are going to grow the market to over $800 million annually by 2020, if Morgan Stanley proves correct.
4. Radio will droop slightly in both the time people spend with it and the money advertisers throw at it.
5. Digital spend is expected to grow in line with time spent engaging with it. Morgan Stanley believes it could grow to $9 billion by 2020, with an increasing share of this to be snatched up by global tech companies.
6. Free-to-air TV is still shining bright, because while time spent with it is forecast to decline, revenue will stay largely intact up to 2020, potentially exceeding the $4.5 billion mark.