Adland’s inflection point
Welcome to a midweek edition of Unmade.
Today: How GroupM is calling the end of the traditional drivers of advertising growth. And Enero sinks again on the ASX.
Unmade’s paying members help us fund our independent analysis. In return they get full access to our archive, which goes behind the paywall after two months; a reduced price for our events, including humAIn and RE:Made; and our exclusive Tuesdata posts.
You can become an Unmade subscriber today and save 45%. The price will never be as low again.
The outlook ahead: Uncharted territory
Eleven days (and alternative methodologies) can make a hell of a difference.
The Friday before last, Dentsu released its predictions for Australia and the world’s advertising outlook.
If you squinted, and didn’t think too hard about inflation, it wasn’t too bad: Australian growth of 3.2% this financial year, 2.4% in 2024 and 2.2% in 2025.
Yesterday, WPP’s GroupM published its global update. It’s more pessimistic about Australia: 0.2% growth this year, taking the local market to $14bn, and just 0.7% in 2024.
In numerical terms, advertising spend predictions from all the holding companies are only worth giving a moderate amount of weight. Nobody wants to be accused of shouting fire in a theatre, particularly when you’re selling the popcorn. The public predictions from holdco’s media arms are often bolder than the outlook being given to investors by the parent companies. Also, nobody knows.
However, they have access to the historical data which makes them excellent at spotting patterns, the end of old cycles and the start of new cycles.
One such moment came in yesterday’s report from WPP. It calls the end of radio’s global growth story. Even taking into account streaming, WPP says that, globally, ad-supported audio has peaked. It will grow just 0.3% this year, says GroupM then “remain roughly flat over the next five years”. It’s about to join newspapers, magazines and broadcast television in a downward trajectory.
GroupM also tackles the impact of AI on the industry. It reckons that within five years, the portion of “AI-enabled” advertising revenue globally will be worth $800bn. What is impossible to quantify is whether any of that is new money. Most likely, none of it.
What is also impossible to quantify is just how dramatic the AI-driven reductions in cost of production will be. That sounds a relatively benign question until one realises that all those reduced costs are human jobs.
GroupM identifies five key themes: Regulation (particularly around data privacy); connected TV (and an annualised 10%+ growth in the segment)’; AI “is likely to inform, or touch in some way, at least half of all advertising revenue by the end of 2023”; retail media to overtake TV by 2028; and “new business growth” (which sounds like the sort of thing an agency person would put in their predictions).
Most importantly though, the GroupM outlook points to a more more significant factor. We’re at the end of a cycle that was defined by shifts between advertising channels, and then the disruption of Covid.
“We are at an inflection point where the secular drivers of advertising growth above and beyond GDP growth are maturing, the pandemic upheaval is receding and the dynamic rise of digital advertising has slowed. This is the basis of our underlying forecast of mid-single-digit advertising growth over the next five years. However, the pervasive impact of AI on the world of advertising could change that.”
What come next is entirely uncharted territory
Unmade Index rises, thanks to Domain
Seja Al Zaidi writes:
The Unmade Index took a mostly positive turn on Tuesday with rising by 0.83% to land at 630.1 points.
The two biggest stocks on the Index – Nine and Domain – saw the most significant increases in their share price. Nine rose 1.55%, while Domain lifted by 4.97%.
However, the smaller stocks saw broad declines, including Ooh Media falling 3.27% and Enero Group, owner of creative agency BMF, by 7.09%. Enero’s share price is now at its lowest point in three years.
Time to leave you to your Wednesday We’ll be back with more later in the week.
If you’re not already a paying subscriber, don’t forget to grab your membership before before the end of financial year price expires at the end of this month.
Toodlepip…
Tim Burrowes
Publisher – Unmade
tim@unmade.media
