2024 set to be another tricky year for Australian advertising industry

The Australian advertising industry is in for another stifled year of growth according to GroupM’s This Year Next Year report for December 2023, with the WPP investment arm forecasting a marginal 0.9% year-on-year (YOY) growth in ad spend for 2024.

The report, launched with global figures last week, came in with the lowest forecast for the Australian market, compared to figures released by IPG Mediabrand’s Global Ad Forecast from Magna and Dentsu’s Global Ad Spend Forecast in the last week.

GroupM forecast growth for 2023 to be flat, coming in at 0.2% YOY, though pointed to pockets of growth for key channels such as video-on-demand (VOD) services, cinema and out-of-home.

The group’s chief investment officer for Australia, Melissa Hey, said: “Despite significant economic pressures, we anticipate 2023 will deliver a broadly flat year for the industry, but there have been key events driving growth. The enduring popularity of VOD services, the “Barbieheimer” effect on cinema, and the strength of the Out-Of-Home market provided pockets of growth, while Social continues to perform and new entrants in the retail media space are accelerating growth.”

Hey continued: “The impact of higher living costs and inflation, putting pressure on increased mortgages’ is affecting multiple sectors in the market, including the retail environment. We anticipate cautious spending by consumers across key sales periods as we lead into 2024. Unknown at this stage is the fallout from the current Ukraine and Middle East conflicts, which are likely to continue to impact the global economy.

“Against this backdrop, we expect the market will remain flat through the first half of next year, with conditions expected to ease in the second half of the year, and more robust growth levels anticipated in the years ahead.”

Australia ranked 10th of the top markets for 2023, but is expected to fall to 11th behind US political advertising in 2024 – considered its own market in terms of spend.

Globally, the GroupM report placed estimates for 2023 at 5.8% growth, decelerating in 2024 to 5.3%. This will represent an improvement in real terms, adjusting for inflation, yet still negative real growth.

“Pure play” was forecast to finish up the year with 9.2% YOY growth, and by 2028 is expected to be larger than the entire advertising industry was in 2022.

The report also highlighted that retail media, whilst the smallest segment within digital currently, was growing quickly, with 8.3% YOY growth expected over 2024. By 2028, GroupM predicts that retail media revenue will exceed that of linear TV and TVC combined.

By contrast, total television was expected to fall 1.9% YOY in 2023. The channel was ranked as the third largest major channel for global ad revenue (behind search and ‘other digital’), falling to 17.9% of the total in 2023.

The forecast was however optimistic for Out-of-home (OOH), which is forecast to grow 10.3% in 2023. It is not expected to surpass 2019 levels until 2024 is not expected to regain its pre-pandemic share of total ad revenue even by 2028.


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