Credit: Melissa Hey
Australia's advertising market will reach AUD $31.1 billion in 2026, growing 7.4%, according to WPP Media's mid-year forecast.
The revised outlook is up from the 6.5% growth predicted in December and exceeds the IMF's forecast nominal GDP growth of 6.0%.
The figures point to an industry still expanding despite a weaker economic backdrop, with spending spread across a broader mix of advertisers focused on performance channels.
Melissa Hey, chief media and investment officer at WPP Media, said the sector continued to outperform expectations.
"Australia's advertising market continues to demonstrate resilience, even against a backdrop of global uncertainty and as the broader economic backdrop becomes more challenging," Hey said.
"Underpinned by continued shifts towards digital, sustained demand from both government and small-to-medium businesses and the rapid growth of digitally native and small-scale businesses, which are driving major growth in performance-driven channels, this outperformance is increasingly notable against a slowing economic outlook."
WPP Media has identified generative search as the biggest emerging force in advertising.
For the first time, the company has separated generative search into its own category.
Globally, advertising delivered through AI-driven search and discovery platforms is projected to generate USD $5.1 billion in 2026, rising to USD $32 billion by 2028 and more than USD $100 billion by 2030.
In Australia, early ChatGPT advertising pilots are underway. AI Overviews and AI Mode are now carrying ads through Google's AI-powered campaign products.
Traditional search is forecast to grow 9.5% to AUD $7.25 billion in 2026. Including generative search lifts total intelligence-driven advertising growth to 10.4%, with WPP Media expecting the gap to widen as AI-led discovery pulls traffic from traditional search results.
The economic backdrop has deteriorated since December. The RBA has lifted the cash rate to 4.35% and does not expect underlying inflation to return to target until mid-2027.
The Iran conflict is affecting Australia through supply-side pressures rather than a collapse in demand. Major advertisers are reporting stock shortages, higher freight costs and increased pressure across airlines, energy, consumer packaged goods and travel.
Retail media remains the fastest-growing advertising segment. WPP Media expects the channel to reach AUD $2.3 billion in 2026, up 19.5%.
Cartology, Coles 360, Amazon, Chemist Warehouse and Endeavour Group continue expanding onsite, offsite, BVOD and in-store offerings.
WPP Media has also delayed its prediction for when retail media will overtake television advertising revenue. Last year's report tipped the crossover point in 2027.
The company now expects it in 2028, when retail media revenue reaches AUD $3.07 billion and 8.4% market share.
Total television revenue is forecast to fall 6.2% to AUD $3 billion in 2026 and another 6.0% to AUD $2.8 billion in 2027.
Linear television drops 14.3% to AUD $1.5 billion, while streaming grows 21.2% to AUD $0.6 billion following Disney+'s advertising tier launch in April.
Seven West Media's merger with Southern Cross Austereo and Nine's acquisition of QMS Media highlight the convergence of television, streaming and out-of-home.
Video-on-demand is forecast to account for 29% of television revenue in 2026, rising to 66% by 2031.
Social and other digital media, including YouTube, will generate AUD $10 billion in 2026, growing 10%. Reels, Shorts, TikTok, creator-led distribution and Reddit's search-driven traffic are driving the increase.
Growth accelerates to 12.3% in 2027 before moderating to about 7% by 2031.
Out-of-home revenue is forecast to reach AUD $1.55 billion in 2026, up 7.1%, before rising to AUD $1.64 billion in 2027.
Audio declines 4.1% to AUD $1.2 billion in 2026, followed by a further 1.4% fall in 2027. Cinema grows 3.6% despite pressure on discretionary spending.
Content-driven advertising across television, audio, print and social video will account for 63.4% of total revenue in 2026, generating AUD $19.7 billion and growing 5.2%.
That share falls to about 58% by 2031 as performance media, retail media and AI-driven advertising continue gaining ground.
Globally, WPP Media has lifted its 2026 advertising growth forecast to 8.9%, up from 7.1% in December. The US recorded the largest revision, rising to 11.9% from 7.4%.
Content-driven advertising worldwide is expected to generate USD $720.2 billion in 2026, growing 8.2%, up from WPP Media's previous 5.3% forecast.
Its share of total advertising revenue, however, falls from 57.5% in 2026 to 55.5% by 2031 as performance and AI-led channels continue taking share.
Advertising revenue as a proportion of global GDP is now at its highest level since 1999, surpassing the dot-com era peak.
Market concentration is also increasing. Alphabet, Meta and Amazon account for 57.6% of advertising revenue outside China, while the world's 25 largest sellers control 75% of total revenue.
None of the top 10 global advertising sellers is a traditional media owner, although Paramount Skydance could move into ninth position if its acquisition of Warner Bros. Discovery proceeds.
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