Abstract: Venture Insight’s new advertising expenditure forecast for FY24 to FY29 predicts 3.7% growth. Despite a decline in FY24, ad spending remains 32% higher than pre-pandemic levels. Television ad spending is expected to grow at 0.6% CAGR, with BVOD gains offsetting broadcast declines. Broadcast radio is projected to grow at 2.8% CAGR, driven partly by online audio. Newspapers and magazines will see slower decline at -2.9% CAGR. Cinema advertising will remain flat at -0.2% CAGR. Out-Of-Home (OOH) will lead growth at 8.8% CAGR, while digital advertising will grow at 4.3% CAGR.

Ad market to reach “new normal” after FY25

Changes in GDP growth rates and changes in total advertising expenditure growth rates are strongly correlated. This allows us to generate total AdEx forecasts from the RBA’s GDP forecasts. We forecast the total advertising market to grow at a 3.7% CAGR over the next five years, stabilising after a period of pandemic and post-pandemic disruption. 

Different sectors show disparate performance as their shares of the total ad budget shift. Digital is and remains the big winner, though its growth will slow as it faces rising headwinds in the coming years. OOH is an outstanding performer. 

Traditional media such as television, radio, print, and cinema have done less well. However, we now expect the most disruptive period has passed, and we forecast moderation or even reversal in their declines.

After the annus horribilis of FY24, we expect a recovery driven by improved economic growth in CY25. Despite the FY24 decline in ad spending, perspective is needed. Total ad spending in FY24 was 32% higher than in pre-pandemic FY19. Advertising is growing faster than the economy, though the shares of different media are shifting as digital and OOH grow fastest.

Turning to specific advertising segments, we expect the following:

• Television (FTA, BVOD, and Pay) ad spending will grow at 0.6% CAGR over the forecast period. The decline in broadcast revenue will be offset by growth in BVOD revenue. The result is a flat market, but this is an improvement on the sharp decline of FY23/24. The maturing of the SVOD market contributes to this stabilisation.
• Broadcast radio has not fully recovered from the pandemic, but we expect 2.8% CAGR growth going forward. Part of this will be driven by online audio (which we have forecast separately for the first time in this forecast). 
• Printed newspapers and magazines will see declines slowing slightly to -2.9% CAGR. This is mainly because the damage has been done, and the remaining business is more robust. 
• Cinema was hit hard by venue closures in the pandemic, then bounced back strongly. However, it will be flat at -0.2% CAGR going forward, due to declining ticket sales putting downward pressure on ad revenue. 
• Out-of-home (OOH) will grow fastest at 8.8% CAGR. Digitalisation allows OOH providers to segment their market better, and retail advertising is achieving above-average growth.
• Digital, the largest segment by far, will grow at 4.3% CAGR as the market gradually matures over the next few years. We also expect some pushback on rates as questions hover over the advertising effectiveness of the digital platform.  

Why does this matter?

The stabilisation of the advertising market after several years of disruption will provide welcome relief to the media industry. It also has some wider significance.

A more positive vista for traditional media will help to preserve these platforms for news publishing. This is especially significant when news media is under pressure and mis- and dis-information concerns are rising. These media remain essential to many Australians, and are indispensable vehicles for the delivery of information and entertainment services. 

Stable and even rising advertising revenues will help the industry to maintain investment in news gathering and publishing. Note that much of this turnaround is due to a rapid slowdown in SVOD and other subscription service growth. Our consumer survey shows that economically pressed media users are turning away from subscription options.

The slowdown of growth in the Digital sector reflects rising questions about the effectiveness of digital advertising. This came into sharp focus late last year when the US Association of National Advertisers (ANA) found in its 2023 Transparency Report that only 36c of every dollar spent on digital marketing that enters a DSP effectively reaches the consumer. The deprecation of cookies (when it comes) will make it even more difficult to address this issue. 

This has implications for concerns about Google and Meta’s advertising market dominance, and whether their hold on the market will grow or weaken. This trend makes it a little easier to manage the issue.

About Venture Insights

Venture Insights is an independent company providing research services to companies across the media, telco and tech sectors in Australia, New Zealand, and Europe.

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