Latest IAB, SMI figures paint different picture on where ad spend is heading

The digital advertising industry may have chalked up a 22 per cent year-on-year increase in spend to $13.9 billion this past financial year, but latest figures are showing signs of softening growth.

According to the latest IAB Australia Online Advertising Expenditure Report produced by PwC, total annual spend to 30 June 2022 reached $13.9 billion, fuelled by the Federal Election as well as summer and winter Olympics. The report showed all categories experiencing double-digital growth year-on-year, with video advertising once again increasing its share of general display advertising to 58 per cent. Overall, video spend was worth $3.1bn, up 30.8 per cent on FY21.

Classified investments were up 30.1 per cent to $2.4bn, gaining one percentage point in share to 17 per cent off the back of a surge in recruitment advertising. By comparison, search and directories decreased 1 per cent to $6.068bn, but still managed to record double-digit growth for the second consecutive year.

Mobile advertising also rose as mobility returned across Australia, growing 15.6 per cent year-on-year to $7.1bn. Programmatic advertising was stable at 70 per cent, with a shift towards guaranteed deals noted by PwC.

However, IAB and PwC said the OAER results highlight more modest growth of 10.6 per cent in the June quarter, reflecting market changes and a recalibration of activity. Total online advertising was worth $3.6bn in the three months to 30 June 2022.

“Although revenue for the Australian digital advertising market in the June quarter was softer than the previous three quarters, growth was still robust at 10.6 per cent,” IAB Australia CEO, Gai Le Roy, commented. “There were strong results across the market for the financial year, with growth of 22% versus 2021, buoyed by investment for the Olympics, Federal Election, and an incredibly strong bounce back for classified listings.”

As well as continued growth over the last quarter, general display gained 3 per cent more spend thanks to rising video advertising investments. Retail was once more the largest sector spending, with automotive, finance and FMCG advertising remaining consistent. The IAB noted entertainment also entered the top five industry categories.

Yet while the latest Standard Media Index (SMI) figures also showed a decline of 4.2 per cent in advertising spend in July, the agency attributed this to the inflated boost provided by the Tokyo Olympics last year. Excluding Olympic broadcasts, SMI said overall advertising demand grew 2.8 per cent in July, or $27.9 million.

SMI A/NZ managing director, Jane Ractliffe, said underlying growth seen in July had given Australia’s ad market 30 consecutive months of year-on-year growth.

“At least within the advertising market, we’re not yet seeing any significant signs of nervousness in the current economic environment,” she said. “This is an especially solid result as for the first time in three years, we’ve seen the first signs that government category ad spend – which has powered a lot of the market’s growth – is starting to normalise from the Covid era with the value of its bookings back 35 per cent this month. But other categories have stepped up to fill the void and as a result we’re seeing good growth on an underlying basis.”

According to SMI figures, July was a bumper month for the out-of-home media industry, which chalked up a growth rate of 28.8 per cent – the highest for any media. In total, OOH delivered total ad spend 2.5 per cent higher than its pre-pandemic result of July 2019.

By contrast, SMI figures showed total digital advertising growing just 0.1 per cent, which it attributed to lower video sites/streaming ad spend. Despite this, the figures echoed PwC’s by showing the value of video-based campaigns across the market continues to grow. Video was $2 million below that of the online display ad market in July.

SMI found the government category delivering the largest decline of any category in July, affecting all major media. It’s a different story for travel, with bookings more than doubling year-on-year.

Across the January to July period, SMI said the market remains well in record ad spend territory with the value of the ad market up 8.6 per cent on the same period last year.

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