Australian advertising revenues are expected to grow by 2.9 per cent to $16 billion in 2018, according to the latest forecast from IPG Mediabrands’ media intelligence and investment division.
Magna’s most recent forecast, issued this week, sees 2018 growth lower than 2017’s expected full-year performance of 3.2 per cent, and also below Magna’s prior forecast for 2018 of 4.3 per cent.
Taking a longer view on industry growth, Magna expects total ad spend to see a 3.8 per cent, five-year compound annual growth rate (CAGR) – about half the pace seen in previous years.
Magna Australia managing director Victor Corones said: “The International Monetary Fund has reduced Australian growth expectations to 4.2 per cent on a nominal GDP basis – down from prior expectations of 5.3 per cent growth.
“This is a combination of both lower real GDP and lower inflation, both of which result in a headwind to advertising spending.
“Whilst forecasts appear initially dampened, The Commonwealth Games and several state elections are potential growth levers across the year for several media sectors. A federal election currently pegged for 2019 also has the potential to move earlier and fall into 2018.”
Magna’s study found that sectors such as travel, automotive and retail (in particular, as the Australian market awaits the impact of Amazon’s launch) are expected to grow in 2018.
One ad-spend sector Magna expects to contract in 2018 is real estate, as activity cools from pace seen in 2017.
Magna’s assessment of macroeconomics affecting future media ad spend include rising household debt, inflation outstripping wage growth, under-employment (those that are unemployed and/or seeking more employment) and flat consumer retail spending in the third quarter of 2017.
It is no surprise that digital remains the driver of ad revenue growth in Australia, and is expected to increase by 10 per cent in 2018 to reach $9 billion.
Australia remains one of the most advanced digital advertising economies globally, with the fourth-highest digital share of media spend expected in 2018, at 57 per cent of total budgets.
Search is predicted to increase 7.7 per cent in 2018, fuelled by an increase of new features and innovation such as location-based search, shopping feeds and integration of search features in more devices, giving advertisers more opportunity to connect with customers, according to Magna.
However, diversification of social media through players like Facebook, Snapchat and Pinterest are expected to place pressure on the growth of search.
Social media is expected to see continued growth in ad spend of 18.1 per cent. The rise of news feeds, diversification of social platforms and increased mobile usage are seen as key drivers in 2018.
Total digital display investment is expected to remain close to flat.
Across the total digital ecosystem, mobile will attract close to 54 per cent of spend. By 2022 Magna predicts mobile will account for as much as 72 per cent of all digital ad spend in Australia.
Screen video advertising, which includes linear, catch-up and video streaming services, is expected to see 2 per cent growth in 2018 and a 1.9 per cent five-year CAGR.
Video is by far the standout performer, expected to see 21.7 per cent growth in 2018 and a 17.8 per cent five-year CAGR.
Linear TV is expected to see a 4 per cent decline in 2018 and 6 per cent contracted CAGR. This is partly a reflection of how TV networks are shifting their business model into newer revenue streams, such as streaming, that are currently classified under digital, Magna noted.
The study says linear TV’s greatest challenge is how best to diversify revenues while continuing to protect the dominant revenues of their broadcast services.
“The clock is ticking on this scenario,” Corones said. “As consumers continue to seek out content across multiple devices and platforms, linear TV channels face audience declines, which in turn is driving inflation for this medium.
“The concept of clients paying more for less is always challenging, even for such a powerful and dominant medium such as linear TV.
“All three major commercial TV networks spoke about their digital streaming capabilities in their upfronts going into 2018, particularly as connected TV apps start to deliver audiences at scale.
“This lays an important foundation for new revenues, so getting the consumer and experience right are critical.”
Magna’s report says out-of-home (OOH) ad spend is expected to see growth of 6.6 per cent in ad spend in 2018, with digital OOH expected to increase by 15 per cent and account for close to half of ad spend within this sector. Traditional OOH is forecast to remain flat.
Radio growth is pegged to 1 per cent year-on-year growth, while print continues to see precipitous declines, and expectations for 2018 are for contraction rates worse than 20 per cent for both magazines and newspapers.
In this piece, Doddle APAC CEO Justin Dery explains why retail marketers should look beyond traditional delivery options this Christmas. 2020 has been a year like no other, and marketers across the world, regardless of industry, have been forced to rethink brand interaction, upweighting digital and tracking rapidly evolving consumer behaviour. This year’s sales season […]
Following an extensive search, Sydney WorldPride today announced the appointment of Adam Zammit to the newly created role of Director, Partnership & Revenue. WorldPride – an international festival celebrating LGBTIQ+ culture and joy – will be held for the first time in the Southern Hemisphere, when the festival comes to Sydney in 2023. Zammit’s key […]
PAW Patrol’s heroic pups are on a roll this summer and ready to spread the word about the importance of water safety, through the PAW Patrol Safety First! prosocial initiative. The water safety program, created in partnership with world champion swimmer and water safety advocate Michael Phelps, launches today with a public service announcement. Starring […]
Independent creative agency, The Core Agency, has created a new campaign for national in-home aged care and disability support provider, Just Better Care. Just Better Care is one of Australia’s largest accredited providers, delivering in-home social and lifestyle support services that enable people to live independently.Its network of over 40 franchise territories provides affordable and […]
Creative agency Andpeople has teamed up with active-streetwear label P.E Nation to create a custom-built augmented reality (AR) dressing room ahead of the label’s latest launch. The digital dressing room was unveiled to coincide with the launch of P.E Nation’s ‘Sustainable in Snow’ collection. In partnership with Andpeople and the globally recognised team behind the […]
From Airbnb to Calm and all the apps in between, the rise of app-based companies calls for specific app advertising solutions, according to Snap Inc. Following the launch of Snap Connect—a tool to help marketers learn about direct response (DR) advertising strategies on Snapchat—Snap has launched an advertising product suite built specifically for app marketers. […]
Ad tech vendor Adform had made a significant step towards promoting transparency in digital advertising, becoming the first global ad tech vendor to subject its tech stack to an independent audit. The audit follows a report released in May 2020 by the ISBA and AOP in the UK. The research, which was executed by PwC, […]
Actor Matthew McConaughey is shining a light on Australian Local Legends, as part of Wild Turkey’s latest ‘Wild Turkey With Thanks’ initiative. In the latest phase of the ‘With Thanks’ platform, McConaughey, who is the creative director of Wild Turkey, chats with Aussies who have stood with conviction, supporting their environment and communities throughout the […]
Queensland’s largest club, mutual insurer, bank and roadside assistance provider, RACQ, launched its new campaign on Sunday, shining a light on its membership model. It’s all smiles and verything is a little brighter when you’re an RACQ member, according to the company’s new campaign, ‘Membership makes all the difference’. It also revealed some of the […]