The traditional linear TV advertising market is reaching a “tipping point” as other video content starts to cannabalise the giant over the next five years and mobile and social media shape as an advertising darlings.
New data from IPG Mediabrands' intelligence unit, Magna Global, has sketched a picture of online video quadrupling over the next five years while the traditional TV market declines.
It said the online video industry in Australia would grow from a $200 million category to $845 million in 2019.
Meanwhile social media is tipped to grow even faster, from $518 million this year to $2.34 billion in 2019, news that would no doubt delight networks such as Twitter and Facebook which bidding to increase their share of advertising dollars.
The forecastoutline the continual decline of traditional mediums such as TV, Radio and Newspapers against the faster-moving digital categories.
Buyers have suggested that in this context, TV networks have been pushing hard on price during current negotiations.
Some said that the impending further fragmentation of the advertising market was leading network negotiators to try an secure as much money as possible while they still held market share.
TV networks have also railed against predictions that SBS could increase advertising in primetime in response to government cuts to the partially taxpayer-funded service.
Buyers including Carat's chief investment officer Paul Brooks told AdNews that the new numbers were hardly surprising but should not be read as a condemnation of traditional mediums.
“They're still very effective,” Brooks said. “It's just that we have a lot more choice in where to allocate our spend now. It's a really good time to be in advertising, as there are so many solutions available to the client.”
Magna tipped TV to decline by 3.2% by the end of this calendar year against 2013, and tipped digital to continue to eat into TV's share of the market.
The 2014 figure has been backed up by WPP unit GroupM, although to a lesser extent, which said last week that the TV market declined from $3.99 billion in 2013 to $3.93 billion this year, roughly a drop of 1.5%.
However, it has forecast TV to pick up next year to its 2013 levels despite the absence of one-off events such as the football World Cup and Winter Olympics.
The Magna report tipped mobile to be the standout star over the next five years, reaching a 40% share of the total advertising market by 2019, a figure which Magna and buyers said was “optimistic”.
It mirrored a recent report by ZenithOptimedia suggesting mobile would be close to overtaking newspapers in advertising spend within the next three years.
The ZO report suggested mobile as a category would grow at 38.3% per year over the next three years.
Magna tipped outdoor to reap the benefits of a fragmented market.
The compound annual growth rate (CAGR) for digital out of home is predicted to be 21.2% from 2014 to 2019 versus the total outdoor and cinema market which is expected to grow 5.1% over the same period.
According to IPG Mediabrands' chief investment officer, Victor Corones, confidence in the sector is being driven by outdoor's ability to broadcast mass messages in an increasingly fragmented market.
Overall, Magna said it was expecting advertising spending growth of 3.8% in 2015. This is against global growth of 4.8%, which is up 0.5 points on the back of a stronger economic environment.
For more news:
Mobile growth to challenge newspapers
TV negotiations reach tipping point
OOH growth due to "unmissable nature"
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