Digital advertising slowed down during the first three months of the year according to new data which reflects a summer of bushfires and the first few weeks of the COVID-19 pandemic. The next quarter is likely to be tougher as advertisers continue to delay or withdraw their investments. 

According to the latest IAB Australia Online Advertising Expenditure Report, total online advertising growth slowed in the first quarter of 2020 to deliver overall year-on-year growth of 3.8 per cent. 

The report compiled by PwC, found the quarterly decline was more significant than the traditional post-holiday slump, with the total advertising in Q1 reaching $2.27 billion in expenditure.

Compare those figures to the December quarter, when digital ad spend was up 5.6 per cent year-on-year or Q1 2019 when digital advertising increased 4.9 per cent year-over-year. 

The report, which captures data until 30th March 2020, reflects the traumatic summer season of bushfires and drought, as well as the traditional post-Christmas decline, but only includes a couple of weeks of data when Australia was seriously impacted by COVID-19 lockdown.

“While this report captures the zeitgeist of the tough start to the year we experienced Australia wide, it precedes the real impact of COVID-19. There is no doubt that the current quarter will be tougher for all in the industry but we are seeing shoots of hope in some sectors,” said Gai Le Roy, CEO of IAB Australia. 

In April the IAB conducted a brief industry survey to determine the impact of COVID-19 on advertising spend. 86 per cent of respondents said they were putting their advertising plans on ice as uncertainty and fear dominated consumers’ mindsets. 

IAB is working on the second wave of its ad impact research to understand the investment intentions of advertisers and agencies for the coming months. Data to date shows that approximately 50 per cent of advertisers who had previously pulled spending are now back in market investing, though mostly at a reduced level.

The number of advertisers who have reduced or stopped their spending all together appears to have decreased though a significant number continue to delay investment or completely withdraw, the IAB said. 

In the March quarter, the travel sector was the hardest hit, recording the largest category decline. While the technology sector experienced the largest increase in share quarter on quarter. 

Source: IAB Australia Online Advertising Expenditure Report, Q1 2020
Source: IAB Australia Online Advertising Expenditure Report, Q1 2020

All online advertising categories showed growth year-on-year, but general display and search & directories declined from the preceding December quarter (12 per cent and 4 per cent respectively). Classifieds grew 2 per cent from the December quarter.

Video advertising continued to grow, increasing to 53 per cent share of general display advertising, an 18 per cent growth on the same quarter last year. 

The skew towards programmatic advertising continued, with 43 per cent of all advertising bought programmatically versus 38 per cent being bought from agencies using insertion orders (IOs).  The percentage of inventory bought directly from advertisers increased to 19 per cent. Some 56per cent, the bulk of content publisher’s video inventory, was bought programmatically in the March quarter. 

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