Australia’s digital advertising industry plays a significant role in the economy and general society, with a new report released recently findings say the industry is responsible for contributing a total economic value of $94 billion to GDP and supporting over 450,000 jobs.
What is the general value of digital advertising?
The Ad’ing Value report which was prepared by PwC and commissioned by IAB Australia, confirmed the industry’s contribution is the equivalent of over 4% of GDP and over 3% of total employment in Australia in 2021-22. The report also found that the social value of the consumer benefits generated by the ad-supported digital ecosystem was $55.5bn in 2021.
Gai Le Roy, IAB Australia CEO said: “Digital advertising is valuable to the Australian economy. It creates new opportunities for businesses to grow, provides consumers with billions of dollars’ worth of value and will be critical for economic recovery in the wake of COVID-19.”
The ad-supported digital ecosystem is central to Australian modern society. In 2021, more consumers were online than ever before: 99 per cent of all Australian adults had access to the internet, 91 per cent of all Australian adults had a home internet connection, and three-quarters of these consumers had an NBN connection. Where consumers led, businesses followed closely- in 2021, where over two-thirds of all advertising in Australia was digital.
What are the benefits of digital advertising to SMEs?
Ad’ing Value found that small and medium sized businesses have received particular benefits from digital advertising, providing smaller businesses with more ways to access consumers wherever they are located within Australia. SMEs receive 61 per cent of the sector’s business benefits and 44% of digital advertising spend now comes from small businesses.
This activity drives further value, supporting productivity and long-term economic growth across the Australian economy. “Our sector is particularly important for the SME sector. SMEs rely on digital advertising to reach consumers across Australia and this ultimately benefits consumers, who are saving money and getting more value from their purchases,” said Le Roy.
What are the consumer benefits of digital advertising?
For Australian consumers, the digital advertising industry has enabled the delivery of an expanding online ecosystem of information, news, and entertainment content as well as social and search services. This is free of charge which is highly valued by the consumers.
The Ad’ing Value report by PwC and IAB found that the average Australian consumer’s perceived value of access to currently free ad-supported digital services and content is $544 per annum. This equates to the provision of a benefit of $8.8bn to consumers annually in ad-supported digital content and services and an estimated $1100 per Australian household.
Ad’ing Value also found that the digital ad-supported online ecosystem benefits the general society more broadly. It strengthens and connects communities, provides increased access to available job opportunities, education, and crucial financial information as well as entertainment content. Additionally, it supports a thriving second-hand marketplace online.
78% of Australian consumers indicated and revealed that digital content and services enable them to stay in contact more easily with friends and family, increasing to 81% in regional areas. Critically, ad-supported online content and services were found to be most important to the lower-income consumers particularly those whose annual income is below $50K.
These consumers reported that the value they attribute to content and services that are currently free roughly double that of consumers with annual incomes of $80K and above.
“This report shows and reveals the huge value that the digital advertising industry provides to the community through free ad-supported content and services, freely available news and information, the ability to connect with others as well as transactional savings – totalling a whopping $55.5bn. There is no doubt the main winners are consumers.” Le Roy said.
What were the key findings of the Ad’ing Value report?
The key players in the digital advertising industry include media channels from broadcast television to video on demand services, gaming, news media, podcasts, and streaming radio.
Additionally, organisations providing support services direct to publisher and self-service platforms, ad servers, ad networks, programmatic tech providers, measurement, analytics and data management platforms and optimisation technologies as well as agencies which provide planning, buying, management and design service(media and creative services).
The benefits generated by the ad-supported digital ecosystem include:
- Contributes $94bn to GDP
- 450,000 jobs in total ~ 24,600 directly
- 44% of digital advertising comes from SMEs, with SMEs receiving 61 per cent of the sector’s business benefits
- $55.5b consumer benefit comprising
- $8.8bn value from access to free ad-supported digital services and content
- $10.2bn value from consumption being more closely matched to preferences
- $36.5bn decreased transaction costs via reduced time and costs
- $544 annual perceived value accessing free ad-supported digital services and content. This equates to provision of a benefit of $8.8bn to consumers annually in ad-supported digital content and services and $1100 per household.
- 25 minutes savings per transaction by accessing ad-supported digital content and services to research products before purchase, equating to $15.9bn in time savings annually
- $71 per month cost savings from researching or purchasing goods and services online
- $14.7b annual total consumer savings from increased competition between suppliers
- 40% regularly finding or purchasing second-hand products online supporting the circular economy
- 81% of regional Australians more easily able to stay in contact with friends and family
- Use of ad-supported services also rose significantly during the COVID-19 pandemic, including online video content (36%), social media (32%) and digital news services (32%).
- For consumers on annual incomes below $50K, the value they attribute to content and services that are currently free was roughly double that of consumers with annual incomes of $80K or above.