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Australia: Marketing spend shifts from advertising to ‘owned’ channels

July 7, 2014

The majority of Australian marketing departments are moving their spending away from traditional advertising and towards ‘owned’ channels, according to PwC’s Australian Entertainment & Media Outlook 2014-2018.

“The reorientation of marketing spend will have the greatest impact on the media, entertainment, and advertising industries, with deteriorating spending on traditional platforms prompting greater urgency to embrace new revenue models” said Megan Brownlow, Editor of PwC’s Australian Entertainment & Media Outlook.

“Digital and social media channels have driven this trend by diluting the reach of traditional platforms, and making it easier for brands to access their audience directly.”

“In response, established media companies are creating new income streams and building new distribution channels to supplement their threatened advertising revenues.”

Customer data is having a profound effect on the way marketing spend is allocated. According to the joint PwC-AMI survey, three in four marketers are using more customer data, mainly because it allows for better targeting and tailoring of products and messages.

The same survey also showed that three in five marketers expect to increase their investment in data and data analytics over the next two years.

“Brands can no longer afford to hold onto the same old assumptions about customer behaviour and preferences,” Brownlow said. “Data is the key to understanding and targeting today’s diverse customer base.”

“Data analytics can also deliver ‘real-time’ customer insights, meaning companies can be much more responsive to their customer’s needs and more agile in their strategic decision making.”

“Brands can now directly target their audience and access insights about their behaviour with digital technology – this has given the marketing function more influence over core business decisions,” Brownlow said. “Marketers have gone from being responsible solely for promotion, to reclaiming sovereignty over the other three ‘Ps’ of classic marketing: pricing, product development, and placement.”

The joint PwC-AMI study shows a correlation between marketers who are investing in data and those who believe the function is moving from a departmental to a more strategic ‘whole-of-business’ approach. 84 per cent of marketers who are investing in data are seeing this shift, compared to 74 per cent who claim their expenditure on data will remain the same.

Total Australian entertainment and media spending grew by 4.5 per cent in 2013, compared to growth of 5.2 per cent globally and 7.1 percent in the Asia-Pacific.

Consumer spending strengthened in 2013 to grow by 4.4 per cent, in large part due to good performances in the interactive games sector, internet – especially mobile – and subscription television, including IPTV.

The advertising market also enjoyed better growth than the previous two years and grew by 4.8 per cent on 2012. However these revenues are spread over more players and channels as the industry experiences ongoing fragmentation. Internet advertising again achieved the most growth, increasing by a rampant 20.3 per cent on 2012.

Over the next five years Australia’s total entertainment and media market is forecast to grow at a 3.4 per cent compound annual growth rate (CAGR) from $33.7 billion in 2013, to reach $39.8 billion in 2018. Consumer spending continues to dominate the entertainment and media market and is expected to grow to $25.4 billion by 2018, a CAGR of 3.5 pe rcent.

PwC’s Australian E&M Outlook forecasts interactive games to be the fastest growing consumer sector, with a 7.6 per cent CAGR and internet access to remain the largest sector, reaching $12 billion by 2018.

Advertising spending is expected to reach $14.4 billion by 2018, a CAGR of 3.1 per cent. By 2018, internet advertising is expected to be the largest advertising sector, reaching $5.7 billion.

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