News Media, Magazines, Internet Ads (Search, Display and Classifieds), Out-of-Home and Books
Internet-based advertising channels accelerated further in 2021, taking a greater share of total advertising revenues and, though further growth will be delivered via e-commerce and shoppable formats, concerns over privacy and changes to audience targeting and measurement capabilities will need to be addressed.
Changes to traditional consumption of print material will maintain the shift to digital publications across Newspapers, Consumer Books and Magazines. Publisher innovation will provide a driving force in shaping the Read category, with connection to cultural movements and digital innovation keeping traditional readership publications moving forward.
Traditional Segments within the Read category are likely to experience flat to moderate growth or declines within the forecast period, as declines in print-based revenue are offset by growth in digital variations.
64.4% of total read revenue was from Internet advertising
Revenues across subscription, advertising and circulation are forecast to see a balancing of declines in print, with growth in digital sources of revenue causing a level revenue forecast for the segment of A$2.22 billion in 2021, declining at a CAGR of -0.47 percent to A$2.17 billion based on the mid point forecast scenario.
This is seen in printed circulation revenue dropping -3.7 percent in the forecast period to A$582 million, and print advertising revenue dropping by -6.0 percent to A$518 million, whilst digital advertising revenue is expected to grow by 2.7 percent to A$458 million and digital subscriptions to grow 8.2 percent to A$613 million based on the midpoint forecast scenario.
Though revenues are not all reported in this segment, News Media companies in Australia have broadened their digital advertising product offerings in recent years. Now offering advertisers an array of advertising products and services including affiliate-type product comparison content, audio and video content, and off-network audience targeting. Digital banner advertising revenue on News Media sites saw a strong post pandemic bounce in 2021, returning 13.6 percent to reach pre-pandemic levels of A$401 million. Moderate growth is expected at a CAGR of 2.7 percent based on the mid point forecast.
In early 2021 Australian regulators, in a global first-of-its kind, introduced policy requiring technology giants, Google and Facebook to enter into negotiations for commercial agreements with publishers for the use of Australian content on their platforms.
This ‘News Media Bargaining Code’ sought to provide publishers with recompense for revenue perceived to be lost to the technology platforms, leaving each publisher open to negotiate directly with each platform. This move has since been reviewed and replicated in markets including the US, Canada and New Zealand. Across 2021 publishers large and small, with the latter often in the form of group bargaining, announced deals with both Google and Facebook, though the specific terms have remained private. The ACCC has since announced a further review of the ‘News Media Bargaining Code’ with a report due for release in September 2022.
One of those to use collective bargaining was Country Press Australia, which negotiated a deal for 70 of its local members to join Google’s News Showcase and more recently has struck a new deal with Facebook for a number of members.
News Corp has also announced a reinvestment in regional papers, with a focus on Queensland across two publications, announcing in excess of 100 new editorial positions to be created. The move driven by audience demand is seen as a trial to expand further into regions.
Luxury titles have also seen a resurgence off the back of consumer habits across the pandemic period with travel, finance and fashion titles experiencing growth in readership.
Research conducted by N&MRC found 18 percent of Australians are paying for News Media content compared to the 17 percent global average, with Australia one of few markets to see growth this year. This revenue growth is predicted to compensate for forecast declines in print revenue with digital news media subscription revenue in Australia forecasted to grow at an 8.2 percent CAGR, reaching A$613 million in 2026 based on the mid point forecast scenario.
Publishers are capitalising on the influx of subscribers and developing personalised offerings across titles and platforms allowing readers to be served relevant content as well as providing advertisers with targeted placements.
The desire to escape the boredom of lockdowns saw a rediscovery of books during the pandemic, after largely stagnant historical growth rates. As the globe has begun to emerge from lockdowns and people have started to return to their daily routines, equally, there has been a downturn of print book sale growth, attributed to the reduction of spare time. Retaining rediscovered readers is the biggest challenge the sector is currently facing, with year-on-year revenue growth of printed books expected to decline to 0.51 percent in 2022 from the 1.63 percent 2020 peak. Australia’s deceleration of book sale revenue growth is consistent with the forecast trend in other English speaking nations. The sector is turning to the likes of new occasions for audiobook listenership and new go-to-market strategies.
TikTok has lit-up the industry by attracting young readers and reviving old novels. The #booktok hashtag initially began to grow in 2020, and has since become a thriving virtual book club with over 43 billion views.37
TikTok has inspired a new generation of Gen-Z readers, a generation that many feared to be captivated by screens, video games and social media. Young readers are turning to influencers on TikTok for book recommendations, the platform acting as a consumer-led, real-time, personalised best-sellers list.
#Booktok has also catalysed the resurgence of old novels such as ‘They Both Die at the End’ (published in 2017) by Adam Silver and ‘It Ends with Us’ (published in 2016) by Colleen Hoover. Authors have noted experiencing sudden and significant spikes in book sales, despite being published years earlier. According to Publishers Weekly, Colleen Hoover’s book sold about 21,000 copies in the first month of release, however sales flattened once the initial hype died down. The novel was rebirthed by #booktok in 2021, with sales peaking at over 29,000 copies a week in August 2021.38
Author discovery has traditionally been driven by publisher led research into cultural and market trends, and titles were launched through traditional book launches. Authors and consumers are now more connected to social media platforms than ever before; everything from author discovery to title launches is being driven directly by authors and their fanbases.
The previously mentioned #booktok culture is an example of this shifting author behaviour, as consumers are now able to access personal interaction with their favourite authors. TikTok has also become a platform for publishers to mine talent. Influencers such as Astro Kirstin (an astrophysicist with over 342k followers) have been offered book deals off the back of their success on the platform.
The global Internet advertising market experienced significant growth in 2021, and Australia was no exception. As online media continues to grow its share of total advertising revenue, Australian Internet advertising revenue is forecasted to grow by a further 11.4 percent in 2022, underpinned by digital-based media, providing advertisers with short term, and immediacy of direct responses. Sustained growth is driven largely by businesses’ investment in digital transformation, and fast growth in e-commerce and commerce-led channels. Marketers continue to invest revenue in Internet channels, due to its ability to return short term value for brands and provide measurement capabilities other industries are developing.
New contexts are emerging and becoming more important in the search ads market, the most notable being e-commerce search. The pandemic accelerated the uptake of e-commerce among consumers, leading to growth in Search revenues of 35.7 percent reaching A$5.70 billion in 2021. This growth has not been limited to Google but is increasingly being delivered by retailer owned sites, including Amazon. Further growth of 9.2 percent is forecasted in 2022, as short-term shifts towards e-commerce. In particular mobile e-commerce during the height of the pandemic has become permanent for many consumers, and this continues to shift more advertising budgets further down the marketing funnel. As Amazon’s footprint in Australia continues to grow, alongside greater focus from Australian retailers to commercialise their online media assets, so too will advertising in sponsored listings in a diversified group of search engine results pages. The mid point forecast scenario will see Search reach A$7.38 billion in Australia by 2026, at a 5.3 percent CAGR.
Classified advertising has rebounded following a decline in 2020 due to pressures associated with the pandemic, to post growth of 15.7 percent in 2021. This came following a spike in the housing, home renovations and used car market which saw a surge in demand to align to the bounce in consumer sentiment and general spending. Meanwhile, job listings have also grown substantially, as companies look to rebuild their teams to accommodate post pandemic pressures. As companies, employers and individuals continue to emerge from the pandemic, online Classified revenue is expected to expand moderately at a 2 percent CAGR between 2021 and 2026 based on the midpoint forecast to reach A$1.99 billion.
Banner and in-feed display experienced a strong return in 2021 with 57 percent growth on 2020 numbers, with an increase of 14.2 percent forecasted for 2022. This growth is expected to continue to 2026 with a CAGR of 5.5 percent. The trading of display placements via programmatic technology remains key in the segment, though previous growth in share for this buying method has flattened, suggesting the market has found its level between pre agreed inventory buying and real-time trading.
Customers’ increased expectations for privacy is driving rapid change in digital advertising, particularly in regards to how companies collect, use and disclose personal information. Following the announcements in 2021 outlining the impending regulatory changes to be introduced to improve consumer data, industry bodies have been starting to communicate their plans to shift the Internet advertising sector into a post-cookie environment, towards a first party data centric focus. At the forefront of these conversations are the likes of Google and Yahoo, who are looking to set a precedent in the industry and for their clients, to ensure a smooth transition once the regulation is enforced. In 2021, Apple introduced iOS 14, allowing customers to opt out of tracking and content targeting, while also requiring apps to request a users permission before collecting their data. While this presents a challenge for publishers to find a solution, equally it poses a challenge to marketers, who will be compelled to redesign their marketing effectiveness strategies to align to the new data regulations, while also being able to adhere to strict internal ROI reporting metrics within their organisations. The extent of what will happen when the power of data is handed back to the consumer is yet to be seen, however to reduce the impact on the market, publishers need to act fast to implement strategies adhering to the new changes before time runs out and marketers turn to other sectors for their revenue spend.
The Internet advertising market continues to be dominated by global digital giants Google and Meta, which has drawn increasing regulatory scrutiny across global markets as Governments question the power of big tech companies and protect revenues of independent publishers across the open Internet. Indeed, Internet advertising’s growth has changed the competitive landscape in the Media Ad sector, with regulation largely struggling to keep pace with big tech’s increasing dominance. There are, however, signs of a change in this dynamic. The ACCC’s Digital Platforms inquiry has sought to review various parts of the digital ecosystem and the competition dynamics therein. Across 2021 and early 2022 the ACCC has released reports covering app marketplaces, consumer choice in search services and web browsers, digital advertising services supplied by digital platform service providers and the data practices of both digital platform service providers and data brokers.39
The Out-of-Home (OOH) sector has seen steady recovery, reaching A$981 million in 2021, a recovery of 27.9 percent and expected to pass pre-pandemic levels in 2022. The industry is expected to grow in the forecast period by 5.3 percent CAGR, based on a mid-point forecast. This is in line with Western Europe and North American markets which expects 5.2 percent and 5.3 percent CAGRs, respectively.
DOOH continues as one of the fastest growing advertising sectors, experiencing a 21.5 percent year-on-year growth rate and expected to grow faster than its physical counterpart at a CAGR of 10.3 percent in the forecast period as operators continue to invest in digitisation of sites and advertisers increasingly take advantage of programmatic buying capabilities.
Given that advertisers’ reliance on roadside placement subsided during the pandemic, the return to pre-pandemic mobility trends has given advertisers confidence to return to traditional pedestrian placements such as bus shelters and public transport.
Despite this return, some challenges with mobility remain, particularly in office environments as working from home habits continue to linger.
With the Outdoor Media Association’s (OMA) January 2022 release of Move 1.5, the industry has a new, more sophisticated standardised metric allowing advertisers to measure both quantitative and qualitative consumer interactions with campaigns. This data tracking has enabled better audience profiling and segmentation, and is seen as one of the driving factors in the increasing shift to digitisation and, to a lesser extent, programmatic advertising. Investment in data and the digital landscape continues to be an important trend for the sector, with the release of Move 2.0 reported to launch in mid-June 2024. This release is expected to build upon existing use cases of Move with greater accuracy, by measuring more formats, geographies and data variables.
The increased digitisation and tracking abilities in conjunction with growing advertiser confidence in new placements, has brought an ever-important emphasis on creativity. Whether through the increased usage of QR codes, capitalising on real time data or experimenting with new creative technologies, this emphasis has driven an adoption of innovations in placements and advertisement interactivity. This was seen in Mecca’s Christmas 2021 billboard ad which allowed pedestrians to purchase gift cards directly from the display, or CGU’s use of anamorphic technology to bring to life their Tall Poppy campaign.
While both print advertising revenue and print circulation continue to shrink, digital mediums are showing a growth trajectory. Revenue from digital circulation and digital advertising is predicted to rise, with forecast 2021-2026 compound annual growth rates of 4.0 and 3.8 percent respectively, based on the midpoint forecast. Australia is predicted to lead the way in digital revenue growth compared to other English-speaking nations.
Though overall revenue for the sector is forecast to decline by 6.7 percent in 2022, publishers are becoming increasingly innovative to adapt to changing consumer preferences.
With digital mediums now representing the majority of readership across all major magazine titles,40 industry focus has pivoted towards digital offerings as part of their longer term strategy.
InStyle Australia magazine is one example of this shifting model, after it was revived in early 2022 under a purely digital model.41 Transitioning away from print circulation and subscription revenue as an income source, the publication pivoted to an entirely online ad revenue-supported approach with live events and branded content, and the incorporation of paywall provisions should they wish to pursue this in the future. Whether it’s ad-supported, subscription based, or a mixture of both, the ability to more quickly deliver content and syndicate it through social media (among other benefits), may make the digital-only model appear a viable option for many players moving forward.
However, despite the forecasted continual decline, the printing presses aren’t stopping any time soon. According to stakeholders in the sector, the key to the survival of print magazines is in the quality of experience it can provide. Rolling Stone Australia magazine, for example, views print magazines not as a key source of revenue generation, but rather a tangible, sensory aspect of their larger media brand portfolio. Moving forward, it appears that print magazines have the opportunity to become a premium product within a suite of content, where high quality production offerings will continue to be a sought after commodity and purchased by consumers eager to enjoy a heightened sensory experience.
Are Media, who, in early 2022 announced the acquisition of e-commerce platform, Hard-to-Find,42 continue to explore adjacencies to their magazine brand, establishing a platform which enables consumers to purchase exclusive products that have been curated and recommended by editors through scanning product specific QR codes from within their physical magazines. This new innovation is providing Are Media with new insights on buying behaviours in addition to a new revenue stream.
Rolling Stone Australia launched a non-fungible token (NFT) cover of their July 2021 issue, featuring Australian singer, Tones & I. Though this foray into the metaverse began as an experiment, the publication sees this as far from a gimmick. Instead, it’s part of a longer-term play to create a deeper connection and sense of community amongst their audience.
Though revenue for traditional glossy magazines may be slowing, diversification and innovation have brought benefits to both consumers and publishers. Looking beyond traditional offerings, new opportunities exist for publishers to leverage digital mediums and create multi-channel content, providing new experiences for consumers to interact and engage with.
Joint Global Leader, People & Organisation, Principal, PwC United States
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Joint Global People & Organisation Leader, PwC United Kingdom
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Partner, HR transformation, PwC India
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Partner, PwC Australia
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Director, CMO Advisory, PwC Australia
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Partner, PwC Australia
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PwC Chief Economist, PwC Australia
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