Linear TV hits ‘tipping point’ as digital advertising continues to dominate ad spend: Magna

Digital advertising has continued to thrive in 2023 as linear TV feels the pinch of a difficult economic climate, according to the latest global advertising industry analysis from Magna.

The IPG Mediabrands investment intelligence firm yesterday launched its updated Global Ad Forecast for December 2023, placing digital ad spend at a growth rate of 8.6% in Australia for 2023, for A$19.6 billion in net advertising revenue.

The majority of this was attributed to search advertising (A$9.9 billion), social media (A$6.3 billion) and digital video (A$2.3 billion), with digital advertising now constituting 71% of overall advertising budgets, up from 43% in 2015.

Looking ahead, growth for digital advertising is forecast to drop slightly to 7.2% in 2024.

For traditional media owners, ad spend spend was in the red. According to Magna, linear ad spend will fall 4.2% in 2023 to A$7.1 billion, and is expected to drop a further 5.7% in 2024. Magna attributed these figures to the general economic uncertainty and trading weakness, with linear TV feeling particularly feeling the hit in revenue as audiences continue to decline.

“In 2023 Australia has seen linear ad formats struggling with economic uncertainty and trading weakness. Tipping point now evident for linear TV as previously inelastic costs become less resilient, and revenues begin to follow audiences,” said Magna Australia head of production and innovation, Ros Allison.

Overall, TV (linear and digital) maintained a significant share of advertising budgets at 17%, down from 30% in 2015.  Print (linear and digital) accounted for 3%, down from 13% in 2015, and radio and out-of-home each represented 5% and 4% respectively.

Overall, growth in net advertising revenue for Australia has appeared to steady after the post-Covid rebound in 2022, with net advertising revenue (NAR) in Australia forecast to record 4.9% growth for 2023, at A$26.7 billion. This occurred amid a nominal GDP increase of 3.5%, combining a GDP growth of 1.8% and CPI rise of 5.8%.

It reflects slowing growth on last year, which Magna forecast to be 8%, for a total $16.8 billion (A$22.3 billion) NAR in 2022. Magna’s estimates for next year have NAR growth lower again, at 3.8% for 2024, or US$19.23 billion (A$28.92).

Allison added: “We expect the Australian market to be subdued but positive into 2024, with easing inflation starting to loosen monetary policy. Accelerating growth for digital channels, including those owned by traditional media owners. New measurement metrics, continued digitisation and format innovation driving growth.”


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