Dentsu Aegis Network forecasts Australian advertising spend to grow by 2.8% in 2018

• Ad spend in Australia forecast to grow by 2.8% in 2018, with main drivers of growth in Government, Retail, Finance and Gambling sectors.
• Global advertising spend to grow by 3.9%, revised up from 3.6% in January 2018.
• Digital to overtake TV for the first time, to reach 38.4% of global share (TV 35.5%). In 21 out of the 59 markets tracked, digital will be the leading advertising channel in 2018.
• One quarter (25.2%) of global ad spend will be delivered through mobile devices for the first time.

Leading advertising and digital communications group Dentsu Aegis Network has released its biannual forecasts, pointing to a more positive 2018 for global advertising expenditure than previously expected. 

In Australia, advertising spend is forecast to grow 2.8% this year to reach AUD 15.7 billion. Digital continues to hold the largest share of total spend by channel, and is predicted to grow 6.1% in the year ahead locally, representing a 48% share of the total media spend. Cinema is predicted to post the largest YOY growth at 6.6%, with OOH expected to grow 5.0%. 

Globally, Ad-spend growth will rise from 3.3% in 2017 to hit 3.9% in 2018 - higher than the 3.6% forecast in January 2018 and taking total investment to US$613.5bn. Global events such as the Winter Olympics & Paralympics, the FIFA World Cup in Russia and US mid-term elections will play an important role in stimulating growth. 

Commenting on the latest forecasts, Simon Ryan, CEO of Dentsu Aegis Network ANZ, said: “The Australian market is showing promising signs of strength, driven by growth in digital advertising in particular. With an increasing focus on personalisation and accountability, marketers must continue to be clever about where they invest their advertising budget to reach consumers in the digital economy.” 

Geographically, Asia Pacific and North America are the major growth regions, contributing 41% and 32% of the global increase respectively. Western Europe accounts for 13% with Latin America at 8% and Eastern Europe 5%.

Jerry Buhlmann, CEO of Dentsu Aegis Network, said: “In the context of synchronised economic growth across the US, Europe and Asia, these figures point to a more positive outlook today than at the beginning of the year and represent a modest but encouraging source of optimism. We are seeing upward revisions in most key markets, with emerging economies such as India showing high rates of growth. The US economy is growing strongly as economic stimulation and tax cuts filter through. Spend in China continues to grow at pace, though driven almost entirely by the ecommerce platforms, Alibaba, Tencent and Baidu.”

“Digital remains the dominant growth area with 25% of global advertising spend expected to be delivered through mobile for the first time. Digital is now the leading form of advertising in 21 out of the 59 markets we track.”

Media trends 

Mobile on the go

The mobile device is steadily becoming our primary point of access to all digital services and content. In 2018, 52.2% of all worldwide online traffic was generated through mobile phones, up from 50.3% in the previous year, according to Statista. People now spend an unprecedented amount of time on their smartphones—more than five hours a day, according to some estimates. This growth in usage is largely driven by the widespread availability of high-quality digital Video. Mobile Video consumption is exploding among all age groups and content categories. 9 in 10 Social media users opt for mobile browsing, with mobile apps accounting for 70% of time spent on Social media.

Reflecting this, mobile is forecast to represent a quarter of global ad spend 25.2% this year exceeding the previous prediction of 24.8%. With Mobile payments forecast to be more popular in the coming years, Mobile is set to continue on a positive growth trajectory a forecast 23.3% in 2018 and 18.8% in 2019.

Digital still calls the tune

Worldwide Digital media spend is forecast to increase by 12.6% in 2018, more than three times the rate of all media (3.9%), to reach US$230.6 billion—a US$25.7 billion incremental increase year-on-year. Online Video (+24.6%) and Social Media (+21.6%) are particularly strong. Paid Search continues to account for the largest share of digital (39%). As previously predicted, Digital will overtake TV for the first time this year to account for 38.4% share of total ad spend vs. 35.5%. In the US, Digital spend is forecast to overtake TV in 2019. Programmatic ad spend is expected to grow by 23.2% in 2018 and 19.1% in 2019 as the ability to consolidate programmatic buying strategies across formats and devices continues to be an opportunity for advertisers to reach the most valuable audiences at scale.  

• Traditional media spend is forecast to decline by just -0.5% in 2018 and -0.4% in 2019. Newspapers and magazines are expected to continue their downward trend, with falls of -7.5% and -6.5% respectively. Radio (+2.0%), Out of Home (+2.2%) and Cinema (+5.9%) spend are expected to show steady growth.
• TV spend is forecast to move back into growth in 2018 (+1.2%), following a -0.7% decline in 2017, remaining a major medium in the mix with 35.5% of overall investment.  

The full report can be downloaded here.