Smaller digital agencies are driving a booming Australian industry, claims Ibis World

Digital agency wages are going to lag agency billings over coming years as the industry continues to post high-growth, claims industry analyst Ibis World.

In its latest report on digital advertising agencies in Australia, the industry analyst forecasted the $2.0bn a year industry will increase by 12.9% over five years to $3.7bn, driven by the growth of smaller agencies.

Currently, smaller agencies dominate the $2.0b a year local sector with 73% market share, says Ibis. Of the major holding groups, WPP has the biggest market share of the local industry with 11.9%, Interpublic (IPG Mediabrands) has 8.0%, Ominicom Media Group 7.3% and Publicis is estimated between 3.0% and 4.0%.

Revenue is expected to increase by 16.9% during this year, fuelled by growing demand for advertising in newer mediums such as mobile games and virtual reality.

Ibis said the outlook for the industry remains rosy in the near-term on the back of new technologies such as virtual reality, the continuing shift to mobile, and the need for clients to overcome users’ employment of ad-blockers.

“The growing adoption of new hardware through which advertising can be transmitted, such as virtual reality headsets and smartwatches, is likely to support this growth,” wrote the authors.

“The need for companies to circumvent digital marketing obstacles such as ad blocking will also fuel demand for industry services.”

Ibis also forecast the industry’s employment prospects remain rosy with the sector’s workforce growing from 8,588 in 2018-19 to 13,864 in 2023-24.

For the agencies, annual revenue per employee is expected to grow from $234,860 to $266,290 in 2023-24. Average wages are not forecast to rise so quickly with them jumping from the current $91,476 to $92,852.

New South Wales remains the centre of the Australian industry with 40.6% of the businesses. Victoria accounted for 27.9% and Queensland 17.9%.

Retailers make up the bulk of digital advertising spend with 21% of the spend, said Ibis, ahead of the financial services sector’s 13% and automotive’s 12%. Real estate claimed 10% spend while telcos were 9% of the market and travel 8%.

Most of the services being offered by Australian agencies are either search engine marketing, which accounted for 46% of industry spend, and digital advertising content which made up 45% of the sector’s taking.

The report also observed that the increasing number of digital channels will provide more growth for the industry as new platforms are rolled out.


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