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Media Market to Grow, Magazines to Lag

01 Jul 2010

The Australians inaugural survey of leading media and marketing chief executives concludes that Australia's $12 billion media advertising market is expected to post solid growth in the coming financial year, led by Free to Air TV and online. Despite this, nobody is getting too carried away about the size or strength of the recovery.


As the worst financial year on record draws to a close today, the theme now is cautious optimism.


The Australians
survey of 19 chief executives found that while almost all are hopeful demand for advertising will be strong in 2010-11, there is widespread concern that uncertainty about the economic outlook and shaky consumer confidence may temper overall growth and create a two-speed recovery.


Australia's largest media agency, Mitchell Communication Group, is forecasting year-on-year growth in total ad-spend of 11-12 per cent for July to December and 6 per cent for January to June 2011, delivering overall financial-year growth of 10 per cent. This is well up on the flat 2009-10 financial year and slightly more bullish than broking analysts such as Citigroup's Justin Diddams, who is tipping 7.2 per cent growth in 2010-11.


Government advertising is expected to be a key driver of growth, with looming federal and NSW elections. Citigroup is tipping the upcoming contest between Juila Gillard and Tony Abbott to generate $150 million in ad revenue.


However, this growth is not expected to be spread evenly across the media sector, with free-to-air television and online expected to lead the recovery, while newspapers and magazines are tipped to lag.

 

PBL Media chief executive Ian Law summed up the mood by predicting strong growth for the company's free-to-air television network, Nine, while forecasting magazines "that are more typically used for brand-building marketing" to recover later.


Mr Law expects the metropolitan free-to-air television industry -- driven by the success of shows such as MasterChef, Underbelly and Packed to the Rafters -- to post year-on-year growth of 15 per cent for 2009-10 when official figures are released next month. This compares with a decline of about 9 per cent in the previous financial year.


Magazine advertising was down as much as 35 per cent a year ago, but ACP now says it is experiencing year-on-year growth in forward booking revenue in Australia and New Zealand.


"In terms of the overall economic outlook we believe we need to be careful," Mr Law told The Australian. "There is still great uncertainty in the economic outlook, consumer confidence is brittle and we will have to watch our cost base very carefully in 2010-11."


Online advertising is expected to outstrip the overall market once again. The most optimistic chief executives were those in pure digital or online classifieds such as Seek or carsales.com.au.


The pay-TV, radio and newspaper chief executives were more conservative about the size and speed of the recovery.


All chief executives agreed the production and management of quality content was crucial to success. "Content is absolutely king," said West Australian Newspapers chief Chris Wharton. "The quality of the journalism will certainly continue to be the lifeblood of newspapers. Reputation and credibility will be our currency."


How to make best use of that content in an increasingly-digital age remains a challenge for media companies. All agree that digital platforms -- and associated devices such as the Apple iPad -- will provide greater opportunities.


Source: The Australian


OPINION/FEEDBACK TO THE EDITOR



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