Ad spend will grow 8.3% to $21.5 billion in 2022 based on a mid-point forecast scenario by PwC but a flattening in the market is ahead
This year would be the second highest annual growth, after 2021, in the history of PwC annual Entertainment and Media Outlook.
PwC 's adverftising outlook is in line with other major forecasters. Dentsu predicts the Australian ad market forecast to grow by 6.7% by the end of this year, GroupM expects 5.8%, Zenith 8% to 9% and MAGNA 10%.
However, longer term there are concerns.
Dan Robins, editor and Australia director of the Australian Entertainment and Media Outlook: “While the recent return to consumer and marketer confidence has been positive, our forecasts for the advertising market indicate that these high levels of growth may not last.
“Into 2023 we expect growth to slow to 4.5% (from 8.3% in 2022), dampening further to near-flat in the subsequent forecast years.
“This will, however, equate to $7.32 billion more being spent annually in 2026 on advertising in Australia than pre-pandemic.”
Laurence Dell, Technology, Media and Telecommunications Partner at PwC Australia: ”The race to win consumer spend and gain attention is clearly on.
“Advertisers are spending more than ever to reach consumers and consumers are spending at record levels on entertainment and media. What is particularly exciting as we look ahead, is that the increase in consumer spending is set to continue, so the race to win growth is still only at half time.
“Organisations that will take a large share of the future growth in consumer spending will be those that can deliver uniquely valued customer experiences, underpinned by frictionless digital.
“The gaming sector is showing that low friction digital purchasing drives growth be that in terms of titles or in-game. Moreover, there is opportunity in subscriptions, but these will need to clearly articulate the value and deliver on customer experience to remain ‘must haves’.”
Samantha Johnson, Entertainment and Media Assurance Partner at PwC Australia:“One of the most striking elements of the growth story for the sector was the acceleration in advertising spend in the second half of 2021.
“This was driven by both a push by marketers to win in e-commerce during lockdowns which saw an uptick in spend within the ‘traditional’ internet advertising categories of search and display, as well as in the internet-enabled counterparts of linear channels - Broadcaster Video on Demand (BVOD) for example.
“We see this continuing to drive growth within the ads market more broadly as digital versions of TV, OOH, radio and publishing grow, balancing declines in their linear, offline alternatives."
PwC says the response from Australian advertisers was very different in 2021, compared to 2020, when lockdowns returned.
“The rebuilding, change to greater flexibility, digitisation and growth in ecommerce that took place in 2020 laid the foundation for advertiser confidence, and with it accelerated spending as 2021progressed.”
This acceleration took advertising spend to $19.7 billion, an increase of 20.3% on 2020 and 17.3% up compared to pre-pandemic 2019.
Internet-based advertising continues to grow its dominant share of the total advertising market, up 26% year on year to a total of $13 billion, with an acceleration seen in the second half of 2021, outstripping all previous expectations.
“Traditional” internet advertising sub-segments of Search (+35% to $5.70 billion) and Display (+57% to 2.75 billion) posted large gains.
Digital variations across all segments showed significant growth, with broadcast video on demand (+56.8%) supporting growth in the free-to-air TV segment.
Similarly music and podcasting streaming advertising and digital advertising in news media and magazines saw growth in 2021.
Based on a midpoint forecast to 2026, strong growth rates in internet advertising is expected to continue at 6.6% a year, reaching $17.9 billion.
Digital advertising is driving sector growth even in the most traditional of channels.
In 2021, digital advertising in newspapers made up 36%. This is forecasted to grow at a 2.7% compound annual to a total of $458 million.
While print newspaper advertising in 2021 still takes up the majority share of total advertising revenue, this is expected to decrease by 6% a year to 2026 at which point digital advertising in news media will account for 47% of the total.
Forecasts suggest digital OOH advertising revenue to increase by 10.3% a year to 2026 compared to physical OOH advertising falling 1.5% a year.
Where DOOH accounts for 53% of OOH revenues in 2021, it will rise to 66.3% by 2026, growing the sector at 5.4% a year.
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