As the market matures, the growth of internet ad spend in Australia is expected to slow down dramatically, dropping from 12 per cent to 3 per cent by 2021.
That’s according to new ad spend forecasts released by Zenith today.
“Internet ad spend grew 12 per cent in 2018, but a softening of the ad market against a turbulent economic backdrop leads us to expect around 7 per cent growth for 2019. Therefore in Australia, we expect internet adspend growth to fall to an average of 5 per cent year-on-year, for the next three years,” the report states.
Zenith forecasts total Australian ad spend to grow by 3 per cent this year, reaching AU$17.19 billion. That’s aligned with its March growth forecast, but reflects a heavier uptake of internet and a steeper decline in TV revenues.
Globally, internet advertising will account for 52 per cent of global advertising expenditure in 2021, exceeding the 50 per cenmark for the first time. That’s up from the 47 per cent of global ad spend that internet advertising will account for this year.
Elizabeth Baker, Zenith’s Head of Investment, Sydney, said: “Australia is ahead of curve in relation to digital share of ad spend, achieving the 50 per cent level back in 2017, and will edge closer to the 60 per cent share level over the next few years.”
Growth in global internet ad spend is being driven by online video and social media, which are expected to grow at average rates of 18 per cent and 17 per cent a year, respectively.
“The original catalyst for digital spend growth was the transition of print classifieds into online. Today, the fastest growing channel is video which now represents 8 per cent of the total ad market,” Baker said. “The mobile platform is also a growing category and now accounts for a quarter of all advertising spend. We anticipate that this will only increase with the launch of 5G in Australia sometime later this year.”
According to Zenith, much of the growth in internet ad spend is coming from small, local businesses that spend all their budgets on platforms like Google and Facebook, which offer simple, self-serve tools to manage campaigns, and highly targeted audiences.
While big brands are investing large sums in internet advertising, the majority are still spending most of their budget in traditional media to create broad mass awareness and reinforce brand values, according to the report.
Mixed fortunes for traditional media
The outlook remains dire for print advertising. According to Zenith, ad revenues of printed newspapers and magazines peaked at US$164bn in 2007 and will total just US$70bn this year.
Zenith forecasts traditional television ad revenues to shrink every year from now to 2021, falling from US$184bn in 2018 to US$180bn in 2021.
However other traditional media are more healthy. Radio is increasing its ad revenue by 1 per cent annually. Out-of-home contractors continue to expand their digital display networks, contributing to 4 per cent annual growth in their revenues. Cinema, though accounting for a tiny 0.8 per cent of total ad spend, is growing at 12 per cent a year, thanks mainly to a boom in the popularity of cinema in China.