Australia’s media advertising economy is predicted to grow by 2.5 per cent in 2019, slower than 2018’s 5.3 per cent growth, to reach AU$17 billion.
The new forecast has been issued by IPG Mediabrands’ media intelligence and investment division Magna.
The new data also predicts Australia ad expenditures will increase by 3.4 per cent in 2020 to reach $17.6 billion, as we remain one of the most advanced advertising economies in the world and with the second-highest ratio of ad-spend per capita of AU$723 per year.
Economic confidence has dipped recently as a result of low manufacturing figures, concerns around the pace of trade and any impact of potential international trade wars.
There is also a deflationary residential property market and low wage growth. Real GDP expectations in 2019 are reported at 2.1 per cent, with CPI at 2.2 per cent for nominal GDP of 4.3 per cent .
In 2020, real GDP will accelerate to +2.8 per cent but inflation will decrease, keeping nominal GDP steady. Should there be any further slow-down we would expect further effect on the advertising market.
Magna says digital advertising now accounts for a massive 60 per cent of brand budgets, the sixth highest share globally.
Concurrently, digital media is so mature in terms of usage and spend that growth rates are starting to plateau.
The digital market however continues to shift to more mobility in device usage with approximately 60 per cent of digital revenues expected across mobile devices. 75 per cent of digital revenues are expected to be through mobile devices by 2023.
Magna Australia MD Victor Corones (feature image) said: “We expect total digital ad spend to grow by +7.5 per cent in 2019, the first year of single-digit growth since 2001.
“Digital spending growth had already started to slow in the first few months of 2019, as it has in many other mature markets, despite the May Federal election.”
Digital growth is driven predominantly by video (+16.1 per cent YoY), social (+11.9 per cent ) and search (+6.5 per cent ) with search overall accounting for 45 per cent of all digital ad spend.
Magna’s data says linear television revenue will shrink by -4.7 per cent this year, the sixth consecutive year of decline.
Linear TV audiences in Australia are shrinking by approximately -10 per cent per year, partly due to the rapid rise of Video on Demand.
Whilst we are seeing a decline in linear TV, the accelerating growth in Broadcast Video on Demand Services (BVOD) will deliver a close to flat market for the TV networks.
The linear TV market has also come under pressure from SVOD services.
Netflix has been in the Australian market for four years and has more than 10 million subscribers.
Other SVOD players are also experiencing double digit growth in audience levels, albeit off a relatively small base.
The introduction of Virtual Oz (VOZ*) measurement through Oztam is now expected to be in market in 2020 and this should bolster the Free to Air Networks’ total revenues.
Australian linear TV has one of the lowest market shares worldwide at less than 20 per cent of total advertising. Despite this lower share TV is clearly still the strongest driver of brand awareness in this market.
In 2019 Magna sees an increase in the number of sporting telecasts on linear television. Many being telecast on the smaller digital networks.
An increased focus on women’s sport is also noticeable across network schedules as is the increase in US-based sports such as the NBA and NFL.
These new events are not yet significantly impacting on overall TV revenues. However sport is seen as a key component to the networks overall strategy to retain live audiences.
The next big sporting event that could significantly move the ad spend needle is the 2020 Summer Olympics in Tokyo.
This year’s federal election had only a mild effect on the advertising market, with Clive Palmer’s reported $60 million campaign the only bump of real significance during the period.
The election appears to have somewhat masked an underlying weakness in the market.
Magna’s data also sees print media, as with most mature advertising markets, coming under continued pressure.
Newspaper advertising spend will decrease by -13.5 per cent this year and magazine performance will be at -17 per cent .
Terrestial radio is stable at +1 per cent growth year-on-year.
Out-of-Home will grow +4.9 per cent this year, weaker than last year’s +9.4 per cent performance, but still robust compared to the rest of offline media formats.
Digital OOH will grow the fastest, but not to the degree that it has in past years due to a slowdown in conversions of classic format OOH sites to digital.