Latest IAB figures show slowing digital ad spend in Q1

Bushfires, drought and onset of COVID-19 zeitgest reflected in the latest digital advertising results

The latest Australian online advertising statistics show spending markedly slowed across all categories in the first quarter of this year as crises from bushfires to COVID-19 took their toll.

The latest IAB Online Advertising Expenditure Report, compiled by PwC, found ad spend in Q1, 2020 was up 3.8 per cent year-on-year, reaching $2.286 billion. The overall drop in expenditure was more pronounced than what’s usually recorded post-Christmas, and indicated the impacted Australia’s bushfires and drought had on the economy.

The figures also take into account the last week of March when the COVID-19 pandemic took hold and social restrictions came into effect.

While all online advertising categories showed growth year-on-year, general display and search and directories both declined from the December quarter by 12 per cent and 4 per cent, respectively. Classifieds grew 2 per cent compared with the same quarter.  

Video advertising continued to be a strong performer, increasing to a 53 per cent share of general display advertising. This represents 18 per cent growth on the same quarter last year. 

Commenting on the results, IAB CEO, Gai Le Roy, said the Q1 figures were a taste of the decline in ad spend expected in Q2. According to IAB US figures released at the end of March, 70 per cent of buyers had already paused planned ad spend as a result of COVID-19, with nearly a quarter pausing all advertising spend for the remainder of Q1 and Q2. Overall, digital ad spend was found to be down 33 per cent and in traditional media, was down 39 per cent.

“While this report captures the zeitgeist of the tough start to the year we experienced Australia-wide, it precedes the real impact of COVID-19,” Le Roy said. “There is no doubt the current quarter will be tougher for all in the industry, but we are seeing shoots of hope in some sectors.”

For instance, data to date showed approximately half of advertisers who had previously pulled spending are now back in market investing, though mostly at a reduced level, IAB said. The number reducing or stopping their spending all together appears to have decreased, although the association cautioned a significant number of advertisers continue to delay investment or completely withdraw.

Programmatic advertising continued its growing dominance in the digital ecosystem during Q1, representing 43 per cent of all advertising purchased. However, the percentage of inventory purchased directly from publishers increased to 19 per cent, with 56 per cent of video inventory purchased in this fashion.

The report also showed a slight increase in desktop inventory purchased in the first quarter to 36 per cent, a figure IAB said indicated the shift to more people working from home. The top five category spenders included the usual automotive, finance, retail and real estate players as well as entertainment companies for the first time.

The IAB’s full-year 2019 report on the digital advertising landscape found the market achieved 5.6 per cent growth to reach $9.3 billion for the 2019 calendar year.

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