Latest performance of advertising sector on Australia’s Economy

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Australian Economy, Uncategorized

Recently, a study was conducted on the Australian advertising sector for over one year by the research firm Deloitte Access Economics. The study was conducted on the behalf of Communication Council, which is the main professional body for representing Australian advertising companies.

Post completion of its study, the following key findings were noted:

  • According to the report, the sector‘s annual contribution to the economy was 40 billion or 2.5% of Australia’s GDP. This contribution is almost as big as the economic contribution of $45 billion by internet and digital technologies sector, equal to economic boost of $40 billion by economic reform including the National Competition Policy, and more than the contribution of accommodation and food services of $38 billion to GDP in 2014.
  • The advertisement Industry has provided 200,000 direct and indirect jobs to the Australian citizens, who have worked in the favour of the consumers, promoted the government’s and business’s objectives.
  • On an annual basis an investment of $12.6 billion is made in the sector. The advertisement sector enjoys a ratio of 1:3 between investment made and benefit to economy.
  • Advertisements help in improving the top line performance of the companies in the sector. Brand value is an asset that is of much importance to the firms. Economic Value of Australia ‘top 100 brands comes to almost $128 billion. Economic value of the advertisements in Retail and Motor Vehicles industry has made highest contribution to the overall $40 billion economic value of the advertisement sector. The economic impact of the advertisements in Retail and Motor Vehicles industry has been $8.7 billion and $4.6 billion, respectively.
  • Despite benefiting the Australian economy, the study revealed that advertisements had certain downsides as well such as cost to the consumers. It has been revealed that more than 30% of the consumers gave preference to online content paying over watching advertisements.
  • Jaimes Leggett, from the Communication Council commented that the services industry plays a prominent role in keeping the economy steady even as the commodity market softens. His comments also included that the Australian advertising sector is one among top five advertising sectors across the world.

 

Outlook

Going forward, the overall Australian advertising market is forecasted to reach $16.4 billion by 2019, as compared to $12.9 billion in 2014 based on PwC Australian Entertainment and Media Report of January 2016. Australian advertising market witnessed a rise of 2.4% during 2014, which is lower than the 6.4% increase in 2013. Accordingly, PwC estimates that Australian advertising industry would increase at an average growth of 4.8% in the next five years, i.e. till 2019. PwC estimates entertainment and media industry to be worth over $43.4 billion by 2019, which is an average of 4.2% growth a year. Internet advertising is expected to rise by 13% reaching $8.2 billion by 2019. Free-to-air TV is forecasted to reach $3.8 billion, $1.5 billion for newspapers and $1.3 billion for radio. On the other hand, the FTA ad market is expected to be flat the coming three years, due to rising demand for digital advertising. Therefore, Nine Entertainment Co Holdings Ltd (ASX: NEC) stock corrected over 45.67% during this year to date (as of June 27, 2016), but the group is investing in multiple channels to revamp its growth track.

Along the above lines, the Australian online advertising has been reported to generate $1,731m, a strong March quarter of 2016, which is a 33.5% rise on a year on year basis, as per the PwC Online Advertising Expenditure Report. Even mobile advertising is rapidly growing which currently accounts over 50% of the General Display advertising. Video advertising represents around 25% of General Display advertising.

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Mobile and Video Display trend (Source: IAB Australia)


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