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GroupM and Zenith release their global and Australian ad spend predictions

Zenith and GroupM have released their forecasts for Australian global spend with both expecting ad spend to show a year on year increase for 2018.

Australian ad spend expected to rise by 3.3% in 2018 to AU$16.72 billion said Zenith, in line with its September forecast. Meanwhile WPP-owned GroupM has forecast local spending to be $16.5bn – an increase of 5.6% from last year.

Zenith’s Elizabeth Baker said out of home and internet advertising will be 2018’s standouts

All media with the exception of print is likely to be stable in 2018 with out-of-home and internet out-performing the wider industry trend, Zenith predicted.

Zenith Sydney head of Investment, Elizabeth Baker, said: “Out-of-home’s success in 2018 is largely attributable to the increasing digitisation of the sector, with digital panels accounting for close to 50% of revenue. With the recent ACCC approval of both the JCDecaux/APN and oOh! Media/Adshel mergers, this should continue to see the sector thrive.

“Driving online sector growth is the increase in ad spend across video and mobile. According to the latest IAB report released for FY2018, video expenditure has increased by 44.6% from FY2017, accounting for 42% of display.

“Radio is also performing well from ad spend perspective. Listener retention on the core broadcast platform – which accounts for 90% of total listening – means the medium remains efficient. This, coupled with new revenue opportunities across other audio channels such as podcasting, streaming, radio-branded social media and online, has been positive for the radio sector.

“TV remains stable, buoyed by events, finance sector investment following the Royal Commission into the banking and financial services industry as well as Government spending, although for the back quarter, increases in Government spend are likely to stabilise as Same Sex Marriage campaigning kicked off in October 2017.

Baker added one of the drivers of the ad industry in 2019 will be upcoming elections: “The Federal Election in 2019 will ensure that Government investment remains strong. The industry body, ThinkTV, which launched in 2016, has also helped stabilise the flow of money into digital with studies around ROI and effectiveness.”

Like Zenith, GroupM sees TV spending to grow with total TV expected to gain 1.2% with AVOD driving the sector.

Total Digital is expected to grow 8% with the greatest growth coming from display advertising, however GroupM sees Outdoor slowing in 2019.

Media spend per channel, in AUS $

Media, AUD $m, net 2018f 2019f
Metro TV 2,543 2,568
Regional TV 684 680
Subscription TV 349 352
AVOD 103 122
TV total 3,678 3,722
Radio 1,211 1,237
Print 1,786 1,696
Cinema 133 138
Outdoor/transport 934 976
Internet display 3,304 3,750
Internet classified 1,620 1,748
Paid search 3,830 3,961
Digital total 8,754 9,459
Media total AUD m 16,497 17,228

Year on year % Change

YOY% change 2018f 2019f
Metro TV 2.1 1.0
Regional TV -1.6 -0.5
Subscription TV -23.1 0.9
AVOD 25.2 17.5
TV total -1.1 1.2
Radio 5.3 2.1
Print -4.3 -5.0
Cinema 2.8 4.0
Outdoor/transport 11.6 4.5
Internet display 16.0 13.5
Internet classified 8.2 7.9
Paid search 7.3 3.4
Digital total 10.6 8.0
Media total YOY% change 5.6 4.4

% share of whole market by channel

% shares of media 2018f 2019f
TV 22.3 21.6
Radio 7.3 7.2
Print 10.8 9.8
Cinema 0.8 0.8
Outdoor/transport 5.7 5.7
Digital 53.1 54.9
Media total 100 100

Globally,  Zenith projected global advertising expenditure will grow 4.5% by the end of this year, boosted by the Winter Olympics, FIFA World Cup and US mid-term elections. Growth will then remain steady and positive for the rest of our forecast period to 2021, at 4.0% in 2019, 4.2% in 2020 and 4.1% in 2021.

Zenith also flagged Amazon as the business to watch over the coming decade saying the site accounted for 0.8% of global ad spend in 2017, the same proportion that Chinese e-commerce occupied in 2009.

Should e-commerce follows a similar path globally to the one it followed in China over the past ten years, it could account for 18% of global ad spend by 2027, the report continued.

GroupM revised down its global ad spend growth figures for 2018f from 4.5% to 4.3%. 2019 growth projections are also whittled from 3.9% to 3.6%, with total new investment anticipated to reach $19B instead of the $23B earlier predicted.

“GroupM’s still strong but slightly fraying 2018 view ties to macro questions: tighter money, China’s slowing growth, and the potential for pricey trade wars,” said GroupM’s future director, Adam Smith. “Real interest rates are edging up globally, but serious potential problems remain limited to a fragile five — Argentina, South Africa, Brazil, Turkey and Venezuela.”

Concerning the global forecast, GroupM’s CEO, Kelly Clark said, “Worldwide advertising investment grows slowly but marketing has never moved faster. Automation proliferates; cycles accelerate; talent grows more mobile.

“The gap between the cost of failure and the value of success grows wider. For advertisers, this underscores the importance of a world view and trusted partners who can help their brands perform where the growth can be found.”

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