Online advertising market spend was $14.7bn in 2023, slowest annual growth since 2020

The nation’s online advertising market has experienced its slowest growth in four years as economic conditions continue to have an impact, a new IAB report shows.

The online advertising market has suffered its slowest annual growth since 2020, with subdued increases across most categories as tougher economic conditions continue to bite.

The new Interactive Advertising Bureau’s Australian Online Advertising Report, compiled by PwC and due to be released on Monday, shows online advertising market spend increased by just 3.7 per cent in 2023, rising from $14.19bn to $14.72bn.

In 2021 advertising spend rose by 36 per cent to $13bn and in 2022 by 9.1 per cent to $14.1bn.

In 2023 video advertising continued to perform well, rising by 14.2 per cent from $3.3bn to $3.76bn, while the digital audio radio market also experienced double-digital growth.

The report shows advertising spend in audio increased by 20.6 per cent to $265.8m – including $166.7m in streaming advertising spend and $99.1m in podcast advertising spend.

IAB Australia chief executive officer Gai Le Roy said the investment in digital advertising remained strong nationally but economic pressures continued to contribute to subdued growth.

“We still saw healthy growth in digital – it’s up by nearly 4 per cent – but obviously the investment in advertising is still a bit softer,” she said.

“It was pleasing to see stronger growth in the second half of the year, but growth was mixed across categories as marketers under pressure for short-term sales focused on strengthening their performance investment.”

Industry sources say uncertainty about interest rates and rising unemployment, up from 3.9 per cent to 4.1 per cent in January, remain a concern for business, with a knock-on effect on how much they spend in advertising.

Spending on search engines including Google increased in 2023.

The report showed advertising in search and directories – for example Google – was the biggest contributor to the overall advertising market at $6.6bn (up 6.1 per cent) in 2023, followed by general display advertising at $5.7bn (up 3.9 per cent).

The digital audio market experienced double-digital growth in 2023, rising by 21 per cent year on year to $265.8m.

Commercial Radio & Audio chief executive Ford Ennals said the rising number of consumers listening to audio content via their devices, including smartphones and smart speakers, had helped to spur growth.

“We see this as a new revenue stream – in many cases it’s different advertisers who are not necessarily using broadcast radio,” he said.

Half-yearly results for media companies revealed significant falls, largely driven by a slump in advertising revenue.

Commercial Radio & Audio chief executive officer Ford Ennals.

ARN Media’s managing director and chief executive officer Ciaran Davis.

Net profit at Nine Entertainment, which has TV, print and radio arms, fell by 40 per cent.

The company’s chief executive, Mike Sneesby, said it was “hard to tell” when advertising would rebound but he believed “it was close to the bottom of the cycle”.

Nine’s digital advertising revenue fell by 17 per cent, driven by the program advertising market.

The report also said the free-to-air television advertising market remained challenging.

In Seven West Media’s results, released on February 13, outgoing chief executive James Warburton said the TV advertising market was not expected to improve until the fourth quarter of this financial year. “We don’t have a crystal ball but in terms of advertising dollars, TV is always the first to go, and the first to come back,” he said.

Speaking last week at the annual results presentation, ARN Media managing director and chief executive Ciaran Davis said that the company – which owns top-rating stations including KIIS FM with breakfast hosts Kyle Sandilands and Jackie ‘‘O’’ Henderson – had experienced tougher advertising conditions.