MAGNA forecasts 4% advertising spend growth in Australia

Chris Pash
By Chris Pash | 19 June 2023
Credit: Charles Cheng via Unsplash

Australia’s advertising market will grow by 4% to $26.2 billion this year despite a slow start to 2023, according to the latest forecasts by IPG Mediabrands' MAGNA.

Next year growth will ease but will still increase by 3% to $23.8 billion.

The forecasts compare to a stellar 7% post-COVID restrictions jump in 2022.

MAGNA's outlook is more optimistic than GroupM which earlier this month downgraded its media growth outlook for Australia to just 0.2% in 2023 as tougher economic conditions take hold. 

GroupM says the impact of higher interest rates, rising energy costs and the increased cost of living are contributing to a flat market forecast.

MAGNA says Australia had a weak start to 2023 with total ad spending falling by 1% in the March quarter, party due to comparison against 2022 federal election spending, as well as the Beijing Olympics.

However, there are some events in 2023 to boost spending, such as the FIFA Women’s World Cup in July.

"It’s been a slower start to 2023 with challenging global economic conditions and consumers under increasing financial pressure, all of which has made for a jittery market," says Lucy Formosa Morgan, managing director, MAGNA Australia.

"Much as we’re forecasting a number of the traditional channels to contract, particularly linear TV, there are areas that remain strong, namely digital (search, video and social) and OOH.

"Digital naturally is benefitting from consumption habits evolving and the traditional channels growing their digital offerings."

Linear television resumes its slide after a positive 3% in 2022. MAGNA's mid year outlook shows television spending shrinking by 12% in 2023. Erosion will continue in 2024, falling 9% as viewing shifts away from television to digital formats.

In 2024, linear advertising revenues will shrink by -6% to reach AUD 5.4 billion ($3.7 billion). Linear advertising spending will fall to represent just 20% of total budgets.

Other linear formats are expanding this year (out-of-home +5% to $1.1 billion, cinema +15% to $86 million), but radio is flat (0%) at $656 million while print continues its fall (-13% to $365 million). Radio is yet to reach its pre-COVID size.

Digital advertising spend is forecast to grow by 8% to $20.5 billion, 78% of total advertising budgets.

Mobile advertising spending is leading growth, up 11% to $14.7 billion. By format, social media (+10%), video (+9%), and search (+8%) is leading the way.

In 2024, digital will again lead growth, increasing by 3% to reach 80% of budgets. This growth will be led by social media, once again, which will increase by +9%.

Globally, predicts media owner advertising revenues will grow 4.6% to $US842 billion this year, or just 0.2 percentage points below MAGNA’s previous forecast of 4.8%.

MAGNA says the deterioration of economic conditions and marketing spending in most Western markets is mitigated by stronger-than-expected growth in some markets (China, Spain), industry verticals (Retail) and media types (Retail, Social).

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