Like many leading economies around the world, Australia is experiencing a level of economic uncertainty. The impact of higher interest rates, rising energy costs and the increased cost of living are contributing to a flat market forecast for the year. While 2022 was a more buoyant year for the industry, 2023 has started slower than anticipated.
Retail Media will be the fastest growing channel in 2023 as the market matures and the data and reporting become even more sophisticated. Online commerce remains a crucial driver of retail media growth.
Media trends framework
Advertising, a partial or primary revenue stream for four of the five largest public companies, by market cap, is a central pillar in conversations spanning technology, culture, government and the economy. To help make sense of all the ways in which these ‘external’ factors will impact advertising over the coming months and years, we’ve developed a framework modeled on a PEST analysis.
This would not serve a fatal blow to TikTok’s parent company ByteDance, it but does point to the ongoing separation of the internet and ad economy between China and rest-of-world.
POTENTIAL TIKTOK BANS
It may soon become imperative to exclude political advertising in non-U.S. markets. On its own, U.S. political spending would rank 11th in ad revenue by country.
POLITICAL ADS
Regulators are weighing laws that would make social platforms more responsible for misinformation on their sites. This could impact development resources allocated to advertising product upgrades or innovation over the near term.
MISINFORMATION
Independent news and media organizations still play a critical role in providing communities with responsible and trustworthy journalism. Maintaining news investment can be a strategic option for advertisers looking for brand-suitable environments.
DIGITAL NEWS
Recent EU rulings on GDPR compliance (including a $1.3 billion fine for Meta) will likely lead to share shifts rather than systemic decline.
DATA PRIVACY
Legislators are weighing content and platform restrictions against historical precedent of Section 230 and similar laws. In the meantime, creating alternative campaign plans and budget allocations is often worth it as it provides the advertiser with the credible ability to walk away from a negotiation if the media partner is unable or unwilling to meet their terms.
Section 230
Big Tech has been a particular focus of antitrust agencies in the U.S. and Europe. This is likely to lead to continued development of smaller media and advertising players over the near-to-medium term.
ANTITRUST CLIMATE CHANGE
Increases in shipping costs (tied to China’s developing nation status) could lead to a reduction in Chinese sellers advertising abroad in the future.
GEOPOLITICS
POLITICAL, LEGAL, REGULATORY:
2023 Australia
Mid-Year Forecast
5.0% Canada
Growth
5.1%
U.S.
Growth
4.8%
U.K.
Growth
4.2%
France Growth
6.0% Germany
Growth
6.6%
Brazil
Growth
0.2%
Australia
Growth
12.0%
India
Growth
4.8%
Japan
Growth
7.9%
China
Growth
U.S.
1
5.0%
2024 Growth
2023 Ad Revenue
$322.5 B
2023 Growth
5.1%
2024 Growth
8.1%
2023 Growth
5.0%
2023 Ad Revenue
$19.7 B
Canada
7
2024 Growth
6.4%
2023 Growth
7.9%
2023 Ad Revenue
$150.6 B
China
2
2024 Growth
3.2%
2023 Growth
4.8%
2023 Ad Revenue
$52.6 B
Japan
3
2024 Growth
13.6%
2023 Growth
12.0%
2023 Ad Revenue
$17.3 B
India
9
2024 Growth
0.7%
2023 Growth
0.2%
2023 Ad Revenue
$14.0 B
Australia
10
2024 Growth
5.2%
2023 Growth
6.6%
2023 Ad Revenue
$19.2 B
Brazil
8
2024 Growth
5.3%
2023 Growth
4.8%
2023 Ad Revenue
$49.4 B
U.K.
4
2024 Growth
9.7%
2023 Growth
4.2%
2023 Ad Revenue
$26.9 B
France
6
2024 Growth
5.0%
2023 Growth
6.0%
2023 Ad Revenue
$36.1 B
Germany
5
TACTICAL
STRATEGIC
EMERGING OPPORTUNITIES
The decline in advertising revenues for newspapers (including digital extensions) continues in 2023, with a 13.3% decrease to $1.1 billion. The decline is more precipitous when looking at traditional newspapers only with an 18.0% decrease in 2023 to $549 million.
After a buoyant year in 2022, digital has returned to more stable growth levels in 2023. While the market is forecast to grow 3.0% this year to reach $13.3bn, the fundamental change in consumer behaviours will ensure digital demand continues into 2024, with the channel forecast to reach $13.6bn.
We expect Australia advertising revenue to grow
0.2%
in 2023, down from the 3.4% forecasted in December 2022.
Channel updates
digital
retail media
AUDIO
Newspapers
TELEVISION
+3.0%
+37.5%
-3.3%
-13.3%
-6.1%
We are likely to see a “superbloom” of AI-backed start-ups gain scale over the next two-to-five years, with many consumer-facing companies using advertising to acquire users and grow revenue. This could lead to another period of advertising growth above-and-beyond expected GDP growth.
START-UP BLOOM 2.025
The three key drivers of secular advertising growth are maturing:
INDUSTRY MATURITY
EMERGING OPPORTUNITIES
Streaming businesses are likely to maintain competitive spending on content, especially sports rights and local language content, as the battle rages for global subscriber and revenue growth.
CONTENT SPENDING
We estimate the global e-commerce share of retail sales will hit 19.3% this year, up from 18.8% in 2021, and 14.5% in 2019, pre-pandemic.
Global expansion of retail and e-commerce platforms is more challenging logistically than scaling a fully digital product like short-form video.
E-COMMERCE PENETRATION
STRATEGIC
As interest rates rose over the last 12-18 months, we noted a deceleration (and in some sectors
a decline) in marketing and sales expenses among digital endemics The slowdown in digital endemic advertising aligns to ad revenue declines between Q2 of 2022 and Q1 of 2023.
INTEREST RATES
We have reached a point where continued price increases have led to added “friction” in consumer spending.
GLOBAL INFLATION
TACTICAL
Economic:
The largest advertising markets also have some of the largest percentages of adults over 65.
GENERATIONAL SHIFT
EMERGING OPPORTUNITIES
Ad revenue has followed shifts in time spent and in 2022 more than a quarter of global ad revenue was spent on the largest UGC platforms (ex-China).
UGC VS. PROFESSIONALY PRODUCED CONTENT
STRATEGIC
Globally, as content and audiences move to streaming platforms with on-demand models, sports has remained the key driver for live TV viewing. The move to streaming and digital assets could have a significant impact on how sports are consumed, with the ability for leagues and media owners to offer more personalized or tailored content.
SPORTS & SPORTS RIGHTS
Consumers are likely to pay for whichever services are investing in quality content, and there is ample headroom for total SVOD consumer spending, especially in markets where pay TV penetration has been historically high.
CONSUMER SPENDING ON VIDEO
TACTICAL
Social:
nothing here
EMERGING OPPORTUNITIES
The less interruptive nature of these messages could broaden the appeal of ad-supported streaming products.
Dynamic Insertion
The benefit of generative AI is likely to improve with the creation of closed or proprietary tools or AI sandboxes.
PERSONALIZATION AT SCALE
We may never have purely autonomous AI agents as members of the marketing team, but there are opportunities for AI to perform categories of tasks.
AUGMENTATION
STRATEGIC
Use of AI should be transparent to audiences, and the goals created for AI optimization must be scrutinized for potential harm and unintended consequences.
TRANSPARENCY, TRUST AND INTENT
Search advertising will account for 22.6% of advertising. Search is happening on video, retail and social platforms. The injection of AI into the channel and expansion of conversational search will lead to further evolution.
SEARCH
Without much discussion, standardization or controls, we’re already using AI to inform half of all ad revenue. This will surpass two-thirds of ad revenue by 2028.
AI & ADVERTISING
TACTICAL
Technological:
AUSTRALIA ECONOMY
While there is no avoiding the tightening in the market, the rebound of migration and consumer price inflation passing its peak are welcome signs for marketers, despite the subdued economic outlook for 2023.
As predicted, 2023 will be the first year of linear television’s downward trajectory as declining demand delivers a 9.4% decrease in linear television revenues. Television’s growth will come exclusively from VOD from this year onward. Non-linear television revenues will increase 21.4% as ad spending continues to follow audiences.
The enduring interest in podcasts and streaming may provide growth for audio—with a 12.8% increase year-on-year. However, total Audio is expected to decline to $1.2bn with a 3.3% year-on-year drop.
OOH
+9.0%
Out-of-home remains a significant growth area, with the channel increasing 6.2% for static, increasing to 9% growth this year including digital panels or $1.2bn. The OOH channel continues to grow at a faster pace than other channels, and we anticipate this will continue in future years.
While 2023 will remain flat with total media growth of 0.2%, the market also has pockets of growth. The ongoing market fragmentation and increased demand for digitisation within traditional channels contribute to a reallocation of expenditure across media channels.
The IMF projected in April that global inflation would be 7.0% in 2023 — better than 2022’s 8.7%, but still well above “normal” levels.
Unemployment levels remain low with the U.S. at 3.7% (May 2023), Germany at 2.9%, Canada at 5.0% and the EU at 6.1% as of April 2023.
The three key drivers of secular advertising growth are maturing:
INDUSTRY MATURITY
Spending by Chinese advertisers abroad.
Creative destruction
High-intensity digital endemic advertisers
Spending by Chinese advertisers remains an important secular driver, although its size and geographic distribution also remain a significant unknown going forward as geopolitical tensions may limit the ability of Chinese platforms and manufacturers to operate profitably overseas.
The creation of new businesses continues, and current regulatory scrutiny of mergers and acquisitions may actually increase competition, leading to greater advertising intensity
We are likely to see a “superbloom” of AI-backed start-ups gain scale over the next two-to-five years, with many consumer-facing companies using advertising to acquire users and grow revenue. This could lead to another period of advertising growth above-and-beyond expected GDP growth.
START-UP BLOOM 2.025
The three key drivers of secular advertising growth are maturing:
INDUSTRY MATURITY
The three key drivers of secular advertising growth are maturing:
Spending by Chinese advertisers abroad.
Creative destruction
High-intensity digital endemic advertisers
INDUSTRY MATURITY
EMERGING OPPORTUNITIES
Higher interest rates led to more conservatism and decelerating growth of advertising expense, and as these companies mature, advertising as a percent of revenue is likely to approach the levels of industry incumbents.
STAT CALLOUT AT BOTTOM OF PAGE 41
The development of mixed reality goggles, on top of the ongoing evolution of smartphone cameras and a behavioral shift from text to images, are likely to support a move to more image-based search.
retail revolution
AUD 20.9 billion.
Australia advertising in 2023 will total
Contact
AUSTRALIA ADVERTISING GROWTH
2023 AUSTRALIA CHANNEL SHARE
Explore various editions of This Year Next Year:
KATE SCOTT-DAWKINS
PRESIDENT, BUSINESS INTELLIGENCE
MELISSA HEY
CHIEF INVESTMENT OFFICER
For inquiries, please write: business.intelligence@groupm.com
Explore other editions of This Year Next Year Mid-Year 2023:
A surprising turn in the magazine market sees the channel forecast to grow 10.4% to $94.2 million in 2023 across traditional and digital magazines. Looking at only traditional magazines, growth is still expected, albeit at a slower pace of 4.0% to $61.9 million.
+10.4%
MAGAZINE
Still recovering from the challenging lockdown years, cinema continues to lag behind its pre-COVID revenues. This year the channel will grow 10.1% to $119.8 million, still shy of the 128.3 million in revenue in 2019. The channel will level out to more traditional growth numbers from 2024 with a 3.2% growth forecast as it finds its place within the new content landscape that has emerged post-pandemic.
+10.1%
CINEMA
Claire Butterworth
National Head of Investment
Deepak Tahiliani
National Head of Digital Investment
