In six months Australia’s total annual online advertising market has shrunk by $200 million dollars from just over $9.3 billion as at December 31, 2019 to $9.1B as of June 30, 2020, though the total spend for the last 12 months is still slightly up on the last financial year.

The change is partly cyclical but mostly COVID related.

The online display and search advertising categories both large experienced YOY quarterly declines, and while classifieds which grew by two per cent YOY in the last quarter, crashed by 22.7 in the latest period.

Only video appears immune.  While the latest quarterly result is down slightly compared to the June quarter 2019, the latest full-year results display solid growth, COVID-19 notwithstanding.

The 12-month growth of video display, however, masks the long term structural decline of banner ads and other display types, which had the worst result for at least four years in the June quarter, eclipsing the March quarter, which at the time was also the worst quarterly result for four years.

Accelerating deceleration

The bushfires and the COVID shutdown are the main drivers, although as the overall market matures, long term growth was slowing already in line with that maturity.

IAB Australia CEO Gai Le Roy told Which-50, Australia’s overall ad market was already softer than many other countries prior to March, however, there was, “Definitely short term extra pain from COVID related challenges.”

“Structural changes on both the media sell-side and within corporates (impacting marketing budgets & strategies) have definitely accelerated,” she said.

However, beyond the short term, there are new areas of growth, according to Le Roy. “Video is definitely dominating total display investment – though we are starting to see some decent increases for podcasts & streaming audio dollars though off a small base and incomplete data set.  And programmatic digital out of home (DOOH)  is set for some decent increases as people start investing in OOH again and they sort out some measurement challenges.”

Trends

By comparison to the latest results, the IAB’s statement in February this year, for the full calendar year 2019, suggested the online ad pie was $9.4B (the actual figure was closer to $9.3B but was inflated by category rounding). That included the General Display Advertising category which grew just  5.1 per cent to reach $3.5bn in 2019,  classifieds which grew just 1.7 per cent to reach $1.7bn in 2019, and Search and Directories (which is overwhelmingly search) which slowed year-on-year to 7.7 per cent growth to reach $4.2bn for 2019, although search still outperformed the market overall.

The really interesting piece of the data, which we don’t get to see but which would tell a very interesting story, is how much of the non-video display market is now captured by social media – basically, the Facebook properties – and what thin, desperate scraps of banner ad revenues remain for the mainstream news service sites from the likes News Corporation and Nine to argue over.

A silk purse, some trotters

 According to Le Roy “The headline number is not a surprise as we anticipated a tough quarter for the industry. Within this, however, video is proving to be extremely resilient and holding steady year on year. We are also seeing retail, government and technology experience the largest increase in share compared to the previous quarter.”

Finally, the report also reveals what the IAB calls a notable shift amongst the top five industry categories during Q2 due to the impact of COVID-19. “Real Estate and Entertainment dropped out of the top five, with Media and Technology joining Retail, Automotive and Finance. The Retail sector experienced the largest increase in share quarter on quarter, while the travel sector experienced the largest decline,” according to the IAB statement.

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