Amazon's arrival tipped to boost ad spend

Daisy Doctor
By Daisy Doctor | 16 June 2017

Media buyers predict Amazon's arrival in September could spur a late lift in ad spend, helping the market grow by 4.1% to $15.4 billion this year. 

A Dentsu Aegis Network forecast says the 'Amazon Effect' will continue disrupting the market into 2018, fuelling additional advertising activity in retail, entertainment and food.

Speaking to AdNews, Dentsu Aegis Network ANZ CEO Simon Ryan said the “reverberating effects” were already evident in the Australian retail market.

“Looking at the first five months of the year, there has already been a jump in retail spend,” Ryan says.

“There will definitely be a roll on effect when Amazon launches, the Amazon effect will be that the retail sector will grow,” he added.

“When any industry or market is effect by a new entrant or disruptor, they have to have a strategy to compete against it, but I think in this case it will have a positive effect on ad spend,” Ryan says.

Amazon's plans to bring its online marketplace to Australia were revealed in April, when the website began actively inviting retailers and brands to sign up as partners to sell goods on its platform.

Digital advertising in Australia is forecast to grow by 12% in 2017 and 11.3% in 2018. It will account for more than 50% of total ad spend for the first time this year.

Ad spend in the UK is predicted to grow 4% and will be negatively impacted by Britain's decision to leave the EU. However, 2018 is predicted to stabilise, with a forecast of 5.9%

The US will slow down to 3.6% for 2017, followed by a slight improvement next year to 4%.

Ryan also says the industry is at a “tipping point” where “digital and data must be the default setting”.

He called on brands to shift their focus from “audience-based” to “consumer-based” marketing.

Global ad spending is predicted as:

adspend

Broadly in line with the Dentsu Aegis report, IPG's Mediabrands Magna report forecasts Australian ad revenues to grow by 4.7%, and top $16 billion this year. However, the forecast is a lower growth rate than seen in 2016, which was 7.8%.

The report associates the ad revenue growth with the “continual expansion” of the Australia digital advertising economy, which is expected to grow by 13.5%, and reach $8.4 billion. Last year's digital growth sat at 24%.

It also indicates that within digital the strongest growth comes from video with a 38% growth expected this year, reaching $1 billion.

As well as this, social media is set to have the highest growth at 20%, stemming from a 26% growth in mobile social spends, however facing a plateau in desktop social media engagement.

This year APAC will see digital take the largest share of advertising budget, representing 37.8% of spend, or $78 billion, slightly higher than television’s 37.7%.

TV will still grow in APAC by 2.2% this year to $77 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 7% and 9% respectively.

Radio and OOH will still see low to medium single-digit growth, but are also losing share as a percentage of the total advertising pie.

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