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Internet advertising to grow 6.6% to $17.9bn by 2026: PwC

Internet-based advertising continues to grow its dominant share of the total advertising market, growing by 26% year-on-year to a total of A$13 billion, with an “acceleration seen in the second half of 2021”, outstripping all previous expectations, according to PwC’s latest Australian Entertainment and Media Outlook.

Traditional internet advertising sub-segments of Search were up 35% to A$5.70 billion, and Display, up 57% to A$2.75 billion, posted significant gains. In addition, digital variations across all segments showed significant growth, with Broadcast Video on Demand growing by 56.8% supporting growth in the Free-to-Air TV segment.

Similarly, music and podcast streaming and digital advertising in news media and magazines grew in 2021.

Based on a mid-point forecast to 2026, strong growth rates in Internet Advertising are expected to continue at a 6.6% compound annual growth rate (CAGR) over the forecast period, reaching A$17.9 billion when collated across all internet-related advertising segments.

The report read that even in the most “traditional of channels, digital advertising is driving sector growth. In 2021, digital advertising in newspapers made up 36%”. This is forecast to grow at a 2.7% CAGR to a total of A$458 million. While print newspaper advertising in 2021 still takes up the majority share of total advertising revenue, this is expected to decrease by 6.0% CAGR to 2026 at which point digital advertising in news media will account for 47% of the total.

Furthermore, the report said that similarly, forecasts suggest digital OOH (DOOH) advertising revenue will “increase by a CAGR of 10.3% to 2026 compared to physical OOH advertising decreasing by 1.5% CAGR to 2026”. Where DOOH accounts for 53% of out-of-home revenues in 2021, it will rise to “66.3% by 2026, growing the sector at a CAGR of 5.4%”.

Source: PwC

Source: PwC

As well as this, the report showed that revenues across subscription, advertising, and circulation are forecast to see a balancing of declines in print, with growth in digital sources of revenue causing a level revenue forecast for the segment of A$2.22 billion in 2021, declining at a CAGR of 0.47% to A$2.17 billion based on the midpoint forecast scenario.

This is seen in printed circulation revenue dropping 3.7% in the forecast period to A$582 million, as well as print advertising revenue dropping by 6% to A$518 million, whilst digital advertising revenue is expected to grow by 2.7% to A$458 million and digital subscriptions to grow 8.2% to A$613 million based on the midpoint forecast scenario.

The report noted, however, that though revenues are not all reported in this segment, News Media companies in Australia have broadened their digital advertising product offerings in recent years. Now offering advertisers an array of advertising products and services including affiliate-type product comparison content, audio, and video content, and off-network audience targeting. Digital banner advertising revenue on News Media sites saw a strong post-pandemic bounce in 2021, returning 13.6% to reach pre-pandemic levels of A$401 million. Moderate growth is expected at a CAGR of 2.7% based on the mid-point forecast.

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