Ad market softens in Australia

SYDNEY: Prospects for Australia's advertising market are noticeably softening, a trend set to harm print titles but doing little to halt the internet's rapid expansion, a study has argued.

PricewaterhouseCoopers, the advisory group, estimated in a new report that adspend levels will post a compound annual growth rate of 2.8% a year to 2016, rising from A$12.5b to A$14.1bn.

This can be measured against the 4.4% yearly uptick outlined by PwC in the corresponding piece of research last year. It also lags behind an anticipated 7.3% improvement globally every 12 months.

Free-to-air television was pegged to witness a lift of 1.8% per year to A$3.5bn by the end of the forecast period, a consequence less of falling viewing figures and more of changing demands upon the industry.

"Content is getting more and more expensive, especially the stuff that is appointment viewing. TV networks need to reach out a little bit more on the restructuring front [and] look at what the newspaper companies are doing," said Megan Brownlow, PwC's executive director.

Conditions are also due to become increasingly challenging for newspapers, as ad revenues contract by 5.1% per year. This marked a downgrade from the average growth rate of 1% highlighted last year.

More specifically, from 2012 to 2016, newspaper adspend will decline by A$575m overall, to A$2.8bn. As a result, the market share taken by this channel will shrink from 30% to just 20%.

Similarly, magazines saw a substantial negative revision in potential ad sales, from an annual drop of 0.2% to a slide of 5% every 12 months, meaning returns decrease from A$571m to A$484m.

By contrast, the internet is in line to experience a 12% leap each year, from A$2bn to A$4.7bn, thus taking 33% of all spending by 2016.

Elsewhere, outdoor is expected to enjoy a revenue increase of 4.8% per year to A$788m, while radio sees an annual improvement of 3.9% to A$1.2bn, and cinema grows by 3.4% a year to A$97m.

Turning to newer digital formats, mobile advertising was tipped to expand by over 60% in the next two years, before the pace of acceleration slows to some 29.2% in 2016, when the medium yields A$90m.

Video advertising is also predicted to attain a value of A$192m in 2016, from a starting point of under A$100m this year.

Data sourced from B&T/Fast Company; additional content by Warc staff, 31 July 2012

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