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News Plus 6 Dec 2021 - 3 min read

GroupM: Australia’s red hot ad market to cool in 2022, Apple’s privacy squeeze ‘doesn’t matter’, slow recovery for TV

By Brendan Coyne - Editor
GroupM Seb Rennie Brian Weiser

GroupM's Brian Wieser and Seb Rennie: Digital train keeps rolling, despite privacy pinch.

GroupM predicts Australia's red hot ad market will cool off in 2022, with investment chief Seb Rennie forecasting a 6.2 per cent rise across the board. But the firm thinks fears of an 'appocalypse' due to Apple's privacy squeeze are overblown, and said marketers have always sought the "least bad data" they can lay hands on. Meanwhile, TV faces a slow road to recovery.

What you need to know:

  • Seb Rennie: 6.2 per cent Australia ad market growth in 2022 with digital to outstrip other channels.
  • Brian Wieser: Apple fears overblown; TV and Youtube buying to converge; TV faces another two years to get back to pre-pandemic levels; audience declines driving some marketers to look elsewhere.

GroupM predicts Australia’s current red hot ad market will cool in 2022 but still forecasts 6 per cent growth across the board.

The firm also played down the impact of privacy moves by the likes of Apple.

While marketers such as Menulog CMO Simon Cheng and Adore Beauty’s Michaela Michaut recently told Mi3 Apple’s iOS 14.5 updates have started to cause problems – “You lose sight of what a large percentage of your audience is doing ... it’s hard to optimise… Your CPMs and your CPAs increase – and it’s a pretty material cost increase,” per Cheng, while Michaut flagged “myriad background impacts”  – GroupM thinks fears of an ‘appocalypse’ are overblown.

“One could be forgiven for thinking that the changes Apple made to the availability of iOS user data don’t matter. Such an observation would generally be correct…” states the report, written by Global VP of Business Intelligence, Brian Wieser.

“While some feared these changes would lead to reductions in ad spending, our view has always been that marketers look for the ‘least bad’ available data at any given time, recognising that no data is ever perfect.”

As such, marketers adjust spend and tactics accordingly, per the report, which notes that the changes have “certainly benefitted [Apple’s] own advertising business.”

Overall, it continues, “it seems unlikely that the impact on industry-level spending was anything more than marginal, much as the roll-out of GDPR in Europe was barely perceptible, despite the radical change that law initially represented.”

With Australia’s privacy laws being significantly overhauled and set to go harder than GDPR, brands, publishers and agencies will be hoping Wieser’s sentiment applies locally. Though others may argue that agencies have been weighting spend away from Apple browsers since it brought intelligent tracking protection (ITP) into play in 2017.

TV headwinds

Globally and across most major markets, the report states it will take two more years for TV spend to recover to pre-pandemic levels. It forecasts strong growth for CTV, predicting revenues to broadly double between 2022 and 2026.

Wieser suggested that “falling viewership of ad-supported TV in traditional environments will lead to reduced reach potential for campaigns that rely on the medium, which will generally make TV less attractive to many marketers”.

He forecast further merging of YouTube and TV campaign management, with such convergence helping to “sustain the role of a broadly defined notion of television in the media mixes for many, while further blurring the lines between TV, digital and search advertising for others”.

Australian market cools

Australia in 2021 recorded 21.5 per cent growth across the board, according to GroupM’s local Chief Investment Officer, Seb Rennie, driven largely by digital spend increases. He forecasts 6.2 per cent growth for 2022, with digital continuing to outstrip other channels.

The report suggests Australia will average 4-5 per cent growth over the next five years.

GroupM’s Australia 2022 forecast is slightly more bullish than Zenith, which predicts 5 per cent growth per the AFR.

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