Programmatic Advertising - Core

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OUTLOOK 2018

CONTENTS AN INTRODUCTION.................................................2 CONSUMER TRENDS...............................................4 DATA .............................................................................8 ONLINE ..................................................................... 12 VIDEO........................................................................ 18 NEWS MEDIA ......................................................... 22 AUDIO........................................................................ 26 OUT-OF-HOME....................................................... 30 SPONSORSHIP......................................................... 34 CREATIVITY.............................................................. 38 DIRECT MARKETING............................................. 42

THE VALUE OF THE IRISH MEDIA MARKET - RESTATED Assessing the level of advertising spend (in media) in Ireland is needlessly difficult. Agencies and media owners continue to base their figures on some official numbers, combined with educated guesswork from multiple sources. This can lead to incorrect assumptions and inaccuracies. The real ‘problem child’ continues to be online advertising. The major players do not disclose their revenue, which has resulted in massive variations in valuations of the sector; in 2017, we believe that agencies under-called online ad spend by 27%, while the online sector itself significantly over-valued it by 32%, in our view. These percentages are based on a deep dive that we have done into the sector, which estimates the real level of online advertising expenditure (gross of commission) in the Republic of Ireland at €451 million for 2017. This is significantly higher than our previous estimates and is driven by a restatement of the level of direct spend that is going to Google and Facebook by thousands of small and medium-sized businesses throughout Ireland. This situation needs to change. It is in all our interests that our industry has more reliable media spend data available. Some sectors do provide accurate information, such as the TV industry: all broadcasters supply revenue figures to an independent third party, without exception. This ensures that a reliable total figure is available for the sector, without individual broadcasters’ shares being revealed. We are calling on all media owners to follow this example and submit expenditure to an independent accountancy firm on an annual basis, so that we can discuss the Irish media market and its value with confidence and without ambiguity. To facilitate this will require the creation of an Irish Media Owners’ Association, which is long overdue. The purpose of such an association would go far beyond the issue of

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spend data. A forum for media owners to discuss the future of the media market and address issues of common concern is urgently required. The challenges facing Irish media owners are discussed in more detail in the Online section of this report (see page 14). Total Media Market Based on our analysis, the overall market in the Republic of Ireland grew by 4.2% to just over €1 billion in 2017. This is the first time since 2007 that we have seen expenditure top this milestone figure. The increase in 2017 was driven entirely by growth in the online sector, up 24.6% to €451 million. Traditional media experienced a decline of 7.9%, with expenditure down across all sectors. There has been a sluggish start to 2018, but this was not unexpected. Big Q1 categories like motors have recorded expenditure declines year-on-year. Despite this, we anticipate just under 7% growth in the total market in 2018 to €1.074 billion. As with 2017, this growth will be driven by online, while expenditure across traditional media will continue to decline, albeit at the lower rate of 4.1%. The market will remain volatile and very short-term. In Northern Ireland, the fragile media market was not helped by the political impasse. The Government is the largest advertiser by far, accounting for over