Digital advertising growth continues to slow despite a boost from SMEs and video
Digital advertising revenue rose by 7.1% across the 2019 financial year, reaching $9.0bn, up from $8.5bn the year prior, but still showed clear signs of a slow market, dropping from a growth rate of 11% in FY18.
According to the latest IAB Online Advertising Expenditure Report, search and directories performed better than most categories, with an 8% jump to 45% of the total share, while video was the fastest growing format of the display market, jumping from $1.3bn spend in FY18 to $1.5bn.
While growth is on the decline, Le Roy says there are still opportunities for bold marketers
Speaking to Mumbrella, IAB Australia CEO Gai Le Roy said the report is a clear snapshot of a softening market.
“Even though digital is still growing quite strongly, it’s definitely not as strong as in previous years, which reflects the overall market which is pretty tough at the moment for all media channels and there’s a lot of restrictions on marketing budgets right across the board,” said Le Roy.
She said the shining light in the report was the continued spend from small and medium businesses, which may not be under the same pressures as the bigger businesses.
“It’s a mix of SMEs still transitioning their marketing spend to digital and engaging more directly with consumers on digital channels as well as newer companies, whether that be direct to consumer companies or the newer enterprises who are growing faster than the traditional legacy companies. So you are seeing a higher percentage growth and investment there for both those types of players,” said Le Roy.
37% of the digital spend went to general display and the remaining 18% went to classifieds. The report, which was prepared by PwC, showed growth in these areas stood at 7.4% and 4.2% respectively.
All online advertising categories experience growth in 2019 – Online advertising expenditure, FY19 compared to FY18 (Click to enlarge)
New and growing formats, like audio and connected TV platforms, were also helping to buoy the decline, said Le Roy, who predicted that the introduction of 5G would enable more growth in those areas in the future.
“Where the old-school banner/ display area is definitely not seeing a lot of growth, you’ve got connected TV and, we don’t break out audio and podcasting yet, but you’re seeing these pockets of innovation and new adoption that help the market continue to evolve and reinvent itself which is the wonderful thing about digital. It just keeps changing to where the consumer is and then you create new ad platforms and formats,” said Le Roy.
The report also reflected the figures from the June quarter, showing a total online spending jump of 5% year-on-year to $2.3bn. Search and directories rose 10.3%, display 4% and video 16.7%. Classifieds fell by 5.9%.
49% of general display advertising viewed on content publishers’ inventory was bought by media agencies via an insertion order or non-programmatic method, a drop from 58% in the first quarter of the year. 33% was purchased programmatically, up 4% on the previous quarter.
Standard display and infeed/ native/ content for content publishers are still primarily purchased by agencies at 44% and 55% respectively.
Online advertising expenditure compared to prior comparative quarter (Click to enlarge)
Le Roy said it was hard to tell if the softening spend would continue into the next calendar year, but that the Christmas quarter would be a good reflection on the state of the market for next year.
“If retail and FMCG are still fairly small then the last quarter, where we usually see a seasonal uplift, may not get as much of a boost as it usually does. It’s really tough to tell beyond the rest of the calendar year to next year, but at the moment we’re not seeing a lot of growth in consumer confidence,” said Le Roy.
“Historically, through any downturn in the market, it’s been proven time and time again that marketers who take an opportunity to increase their share of voice in a slower market achieve an economic reward for doing so. But a marketer needs to be able to sell that into their CFO and CEO and ensure them they will get that return.”
