By Jon WilfertThe Advertising Agency of Australia (AA) is facing a growing challenge to its advertising revenue model amid growing concerns that advertisers are not taking full advantage of the lucrative digital ad market.
While there is widespread consensus that the internet is making advertising more accessible to consumers, there are growing fears that some advertisers are finding it difficult to find an audience on mobile devices, where the mobile ad market is expected to grow rapidly.
Key points:Advertising agency’s chief executive says digital advertising revenue is up more than 50 per cent in the last six months, but that it is “difficult” to find customersAdvertising revenue is “trending” upwards, and is set to grow “strongly” in the next three yearsThe chief executive of the AA, Chris McKeon, has said digital advertising is up by 50 per per cent compared to last year.
“Advertising on mobile is growing very strong, it’s trending upwards, it is trending up, it was trending lower in 2016,” he told Radio National’s The View.
“We are very, very confident about our digital advertising business, we believe we have the right tools to help advertisers find the right audience on these devices.”
The AA’s advertising revenue was up almost $300 million in the year to June 30, with revenue of $3.2 billion, compared to $2.4 billion the previous year.
It is a significant jump on the $2 billion revenue recorded in the same period last year, when advertising revenue fell to $3 billion.
The AA has been at the forefront of the push for digital advertising to take advantage of new platforms and new audiences.
It has been a leader in creating an audience-driven advertising program, which helps advertisers target their messages to those who would typically opt out.
“There is a lot of discussion around this digital ad revenue that’s growing, and I think that is important,” Mr McKeo said.
“I don’t think it is necessarily what we should be doing as an industry, but we certainly need to be doing it.”
While there are many reasons for digital ad revenues to grow, one of the biggest drivers is a shift from advertising to content.
Digital ad revenue has increased from $1.4 trillion in 2016 to $1 trillion in 2021.
“Digital ad is a much bigger, more efficient way of delivering content than print advertising,” Mr Wilfern said.
He said digital ads are expected to account for $100 billion of the total revenue from all media over the next four years, but said it would take a significant amount of time for advertisers to understand what audiences like.
“It is certainly not as simple as simply putting up a billboard or showing a video on YouTube and then going and putting it up in your business,” Mr Milford said.
In the next few years, advertisers will increasingly use the new technologies and tools that have been developed to target their content and message in new ways, he said.
This is expected, he predicted, to lead to “a much more complex and nuanced approach” to digital advertising.
Mr McKeone said the industry will need to take a long-term view on digital advertising, and the way it works in the digital era.
“The key for us is to be able to build a model that works for the future, and that means the industry has to be very deliberate about how it works for what’s going to be an increasingly mobile-centric economy,” he said