Marketing spend shifts from advertising to 'owned' channels

7 July 2014

  • 2 in 3 marketers have seen a shift in marketing spend from 'bought' to 'owned' channels
  • 1 in 4 marketers spend between 20 and 30 per cent of their budget building and maintaining their own channels
  • 3 in 5 marketers estimate their investment in data and data analytics will increase in the next 1-2 years
  • Marketers who are investing in data are more likely to see a shift in the marketing function from a departmental to a whole-of-business approach
  • Australian entertainment and media market is forecast to grow to $39.8 billion by 2018, a compound annual growth rate of 3.4 percent
  • Consumer spending on entertainment and media products forecast to grow t0 $25.4 billion by 2018, a compound annual growth rate of 3.5 percent
  • Advertising spending to reach $14.4 billion by 2018, a compound annual growth rate of 3.1 percent
  • By 2018 internet advertising will be largest advertising sector, reaching $5.7 billion

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 released today.

"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."

According to the Australian Bureau of Statistics, more than one in four Australian businesses had a social media presence as at 30 June 2013, up from one in five the previous year. The ABS also found that business use of digital technology has increased more broadly – for example nearly a third of Australian businesses received orders over the internet in 2012-13, with an increase in value of nearly $10 billion from the year before.

This supports the findings of a joint PwC-Australian Marketing Institute (AMI) survey of 162 senior practicing marketers which found that 67 per cent of them had seen a shift in budget allocation from 'bought' to in-house 'owned' channels over the previous 12 months.

Content is still king, but brands are the new kingmakers

With digital and social media platforms fracturing audiences and diluting the reach of traditional channels, companies are increasingly creating their own content in order to get in front of consumers.

"Organisations are now 'doing it for themselves' by redirecting advertising budgets into consumer-relationship-management and shareable online editorial and video to build their presence" Ms Brownlow said.

"We are seeing sports, telecommunications, and even finance brands becoming more like advertising and media companies in terms of the quality of the content they produce."

Data analytics the key to unlocking customer value

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," Ms 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."

Marketing's influence over business strategy grows

"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," Ms 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.

Sector Performance

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 percent 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 percent.

PwC's Australian E&M Outlook forecasts interactive games to be the fastest growing consumer sector, with a 7.6 percent 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 percent. By 2018, internet advertising is expected to be the largest advertising sector, reaching $5.7 billion.

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