FORECAST: Advertising spend in Australia won't fully recover until 2022

Chris Pash
By Chris Pash | 1 October 2020

Australia’s total advertising spend won't return to 2019 financial year levels until 2022, according to forecasts by research  house Venture Insights.

But ad spend is expected to grow strongly after that, picking up 4% each year to 2024 despite the impact of the COVID-
19 pandemic.

David Kennedy, head of research, says ad spend is sensitive to GDP movements.

The 2020 financial year saw a 6.8% fall in adspend across all forms of traditional and digital media compared to 2019.

But the impact was largely confined to the June quarter.

The slide is easing in the current 2021 financial year but continuing economic weakness over the whole year will see annual spend fall a bit further before recovering strongly in 2022 on the back of a strong GDP growth forecast by the Reserve Bank.

The Venture Insights forecasts aline with other industry analysis. According to Magna, IPG Mediabrands’ media investment and intelligence division, spend will rise next year but won't get back to 2019 levels for two years.

"The shape of the industry has also changed," says Kennedy at Venture Insights.

"Digital spend has been relatively robust, while traditional segments such as television, print, cinema, outdoor and were hit hard and will now form a smaller share of the overall adex budget."

Digital share of ad industry revenue is forecast to rise to 68% by 2024 from 56% in 2019.

This fits with other forecasts. Zenith says the coronavirus is accelerating to takeup of digital adspend and by 2022 it will represent 61% of the total in Australia.

Venture Insights says television (FTA, BVOD and pay), print and radio adex are expected to decline at 2%, 17% and 1% each year to 2024.

Kennedy says the rapid decline of print advertising spend is nothing new, and COVID-19 has only exacerbated its decline.

"However, COVID-19 has masked an underlying decline in FTA television,” Kennedy says.

“Even before the pandemic, we were seeing faster decline in FTA ad revenue driven by lower time spent in front of the TV. BVOD is growing fast but is still not big enough to offset these declines.

"Radio is a bit more robust, but we expect growing competition from streaming audio in the coming years." 

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