INDUSTRY REPORT OD5535
Digital Advertising Agencies in Australia
Dialled in: Social media and the popularity of internet-enabled devices have driven
demand
Alen Allday | March 2022
IBISWorld.com
03 9655 3881
info@IBISWorld.com
Digital Advertising Agencies in Australia
March 2022
Contents
Recent Developments......................................................... 3
COMPETITIVE LANDSCAPE.......................... 22
ABOUT THIS INDUSTRY.................................. 5
Industry Definition................................................................5
Major Players...................................................................... 5
Main Activities..................................................................... 5
Supply Chain....................................................................... 6
Market Share Concentration............................................. 22
Key Success Factors........................................................22
Cost Structure Benchmarks............................................. 23
Basis of Competition......................................................... 25
Barriers to Entry............................................................... 25
Industry Globalization........................................................ 26
INDUSTRY AT A GLANCE................................ 7
MAJOR COMPANIES...................................... 27
Executive Summary............................................................ 9
Major Players.................................................................... 27
Other Companies.............................................................. 29
INDUSTRY PERFORMANCE..........................10
Key External Drivers.........................................................10
Current Performance........................................................ 11
INDUSTRY OUTLOOK.................................... 14
Outlook.............................................................................. 14
Industry Life Cycle............................................................. 16
PRODUCTS & MARKETS............................... 17
Supply Chain..................................................................... 17
Products & Services.......................................................... 17
Demand Determinants...................................................... 18
Major Markets....................................................................18
Business Locations........................................................... 20
OPERATING CONDITIONS............................ 31
Capital Intensity................................................................. 31
Technology & Systems......................................................32
Revenue Volatility..............................................................33
Regulation & Policy........................................................... 33
Industry Assistance........................................................... 34
KEY STATISTICS............................................ 35
Industry Data..................................................................... 35
Annual Change..................................................................35
Key Ratios......................................................................... 35
ADDITIONAL RESOURCES............................36
Additional Resources........................................................ 36
Industry Jargon..................................................................36
Glossary............................................................................ 36
CALL PREPARATION QUESTIONS............... 38
Role Specific Questions.................................................... 38
External Impacts Questions.............................................. 39
Internal Issues Questions.................................................. 39
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Recent
Developments
March 2022
Low unemployment increases labour costs and shortages for employers
The unemployment rate increased slightly to 3.5% in August 2022, but remains close to the lowest official rate since
1974. This low unemployment rate has supported real household disposable incomes and consumer sentiment
during a period of economic uncertainty. In contrast to businesses, the fall indicates a tightened labour market for
employers due to strong pressure to attract and retain employees, while labour has been scarce.
This section last udpated November 02, 2022
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About IBISWorld
IBISWorld specializes in industry research with coverage on thousands of global industries. Our comprehensive data and in-depth analysis help
businesses of all types gain quick and actionable insights on industries around the world. Busy professionals can spend less time researching
and preparing for meetings, and more time focused on making strategic business decisions that benefit you, your company and your clients. We
offer research on industries in the US, Canada, Australia, New Zealand, Germany, the UK, Ireland, China and Mexico, as well as industries that
are truly global in nature.
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About This Industry
Industry Definition
Industry agencies create advertising campaigns and place the advertisements across digital media outlets. Agencies
produce advertising material and provide advice, media planning and buying services, creative services, and
account management services, either in-house or through subcontractors.
Major Players
WPP AUNZ
Omnicom Media
Interpublic Group
Main Activities
The primary activities of this industry are:
Search engine optimization (SEO)
Mobile advertising
Digital display advertising
Social media marketing and management
The major products and services in this industry are:
Search engine marketing
Digital advertising content
Other services
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Supply Chain
SIMILAR INDUSTRIES
Newspaper Publishing in Australia Magazine and Directory
Publishing in Australia
Advertising Agencies in Australia
Free-to-Air Television
Broadcasting in Australia
Pay Television in Australia
Media Buying Agencies in
Australia
RELATED INTERNATIONAL INDUSTRIES
Global Advertising Agencies
Advertising Agencies in the US
Media Buying Agencies in the US
Digital Advertising Agencies
Advertising Agencies in the UK
Werbeagenturen
Advertising and Market Research
Services in New Zealand
Advertising Agencies in China
Advertising Agencies in Canada
Advertising Agencies in Ireland
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Industry at a Glance
Key Statistics
Key External Drivers
$2.5bn
Revenue
Annual Growth
Annual Growth
Annual Growth
2017–2022
2022–2027
2017–2027
7.8%
8.8%
% = 2017–22 Annual Growth
2.0%
3.3%
IT and telecommunications
adoption
Internet subscribers
6.3%
14.1%
Business confidence index
Demand from internet publishing
and broadcasting
Industry Structure
$366.4m
Profit
POSITIVE IMPACT
Annual Growth
Annual Growth
2017–2022
2017–2022
Life Cycle
Growth
Capital Intensity
Low
Concentration
Low
11.3%
MIXED IMPACT
14.8%
Profit Margin
Annual Growth
Annual Growth
2017–2022
2017–2022
2.2pp
Revenue Volatility
Medium
Regulation & Policy
Medium / Steady
Industry Globalization
Medium / Increasing
Competition
Medium / Increasing
NEGATIVE IMPACT
Industry Assistance
Low / Steady
Technology Change
High
Barriers to Entry
Low / Increasing
3,970
Businesses
Annual Growth
Annual Growth
Annual Growth
2017–2022
2022–2027
2017–2027
6.7%
5.3%
 The rising prevalence of internet-enabled devices has
increased demand for industry services
 Marketing campaigns run on multiple social media platforms
have aided industry demand growth over the period
9,719
Employment
Annual Growth
Annual Growth
Annual Growth
2017–2022
2022–2027
2017–2027
7.8%
7.0%
 Low barriers to entry and growing profit margins have
encouraged new players to enter the industry
 The number of social media applications offering advertising
space to businesses is forecast to rise
 Profit margin growth is projected to slow over the period as
the industry becomes more competitive
 Ad blocking is likely to rise, prompting players to pursue
other digital mediums for advertising
$966.3m
Wages
Annual Growth
Annual Growth
Annual Growth
2017–2022
2022–2027
2017–2027
8.1%
8.3%
7
Key Trends
 Search engine marketing has remained the industry's main
service offering over the past five years
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Products & Services Segmentation
Major Players
SWOT
STRENGTHS
Growth Life Cycle Stage
Low Imports
High Profit vs. Sector Average
Low Customer Class Concentration
Low Product/Service Concentration
Low Capital Requirements
WEAKNESSES
Low & Increasing Barriers to Entry
Low & Steady Level of Assistance
OPPORTUNITIES
High Revenue Growth (2017-2022)
High Revenue Growth (2022-2027)
Internet subscribers
THREATS
Low Performance Drivers
IT and telecommunications adoption
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Executive Summary Dialled in: Social media and the popularity of internet-enabled devices
have driven demand
The Digital Advertising Agencies industry has grown strongly over the past five years, largely due to the increasing
popularity of online marketing solutions among both private and public sector organisations, and strong growth in the
number of firms providing these services to clients. Businesses and other organisations have become increasingly
aware that digital marketing can more effectively target their key markets than traditional print and TV mediums.
Overall, industry revenue is projected to increase at an annualised 7.8% over the five years through 2021-22, to total
$2.5 billion. This includes projected growth of 10.3% in the current year, as revenue recovers from slowdowns in
2019-20 and 2020-21 in response to the COVID-19 pandemic that caused weak demand for digital advertising.
Over the past five years, search engine marketing (SEM) has remained the industry's dominant service. Businesses
have increasingly hired digital advertising agencies to implement search engine optimisation and pay-per-click
marketing campaigns to boost their visibility in search engine results. Social media platforms have grown more
popular as online advertising channels over the period, as they can display relevant ads to consumers based on
data collected from their internet browsing activity. Organisations have increasingly sought the services of industry
operators to handle their social media presence. Demand for ads that can be viewed on mobile devices has also
increased over the period, due to the rising proportion of domestic internet traffic generated by smartphones and
tablets.
Industry revenue is anticipated to continue expanding rapidly over the next five years. Growing demand for SEM
strategies, social media marketing services and digital advertising solutions for emerging content-viewing mediums
such as augmented reality and wearable technologies such as smartwatches will likely drive revenue growth over
the period. However, the rising use of ad blocker software may limit demand for industry services. Overall, industry
revenue is forecast to grow at an annualised 8.8% over the five years through 2026-27, to total $3.8 billion.
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Industry Performance
Key External
Drivers
Demand from internet publishing and broadcasting
Digital advertising agencies target consumers based on their internet activity. Therefore, internet-based marketing
typically becomes more effective and appealing when the amount and variety of content available online increases.
Demand from internet publishing and broadcasting is projected to increase in 2021-22.
Internet subscribers
Internet penetration strongly determines demand for industry services. Most digital advertising solutions, such as
search engine optimisation and webpage banners, are delivered and viewed online. A higher number of internet
connections expands the reach of the industry's advertising services, making the internet more appealing as a
marketing channel. The number of internet connections is expected to increase in 2021-22, providing the industry
with an opportunity to boost revenue.
IT and telecommunications adoption
The IT and telecommunications adoption index measures the ability of Australian households and businesses to use
new and existing technology. As more businesses (such as traditional bricks-and-mortar retailers) expand their
online presence, they can purchase digital advertising solutions to market their products and services. Slower
growth in the index is generally associated with weaker adoption of technologies through which digital advertising
agencies can deliver marketing material, threatening the pace of industry expansion. The IT and
telecommunications adoption rate is projected to increase in 2021-22.
Business confidence index
Business confidence typically influences how much businesses are willing to invest in marketing. Firms often
increase their advertising budgets during periods of stronger economic growth and business certainty, which
positively influences industry revenue. In contrast, client companies are likely to reduce advertising, including digital
advertising, when business confidence is negative. Business confidence is projected to be positive in 2021-22.
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Current
Performance
March 2022
Revenue for the Digital Advertising Agencies industry has grown
significantly over the past five years.
Online advertising solutions have risen in popularity among private and public sector organisations compared with a
range of traditional mediums, such as print and TV. This strong growth trend has driven the industry's rapid rate of
expansion. Businesses have increasingly sought help with search engine optimisation, social media marketing and
mobile marketing over the past five years. Many businesses now employ digital advertising agencies to manage all
of their digital advertising. Public sector entities have also allocated greater proportions of their marketing budgets to
industry services over the period. In addition, the COVID-19 pandemic is expected to only have a minor effect on the
industry. Despite demand for industry services slowing in 2019-20 and 2020-21 as some clients cancelled
advertising campaigns, demand is anticipated to recover in 2021-22.
The rising prevalence of internet-enabled devices has supported the industry. Digital advertising agencies have
benefited from rising demand for internet-based marketing strategies from organisations that lacked an online
presence prior to the past five-year period. Overall, industry revenue is projected to rise at an annualised 7.8% over
the five years through 2021-22, to total $2.5 billion. Revenue is anticipated to increase by 10.3% in the current year,
in response to growing demand for advertising in newer mediums such as mobile games, social media, and virtual
reality (VR).
TARGETING KEY AUDIENCES
Businesses have grown increasingly aware of the efficiency with which
industry players can reach their clients' intended markets.
Relative to traditional print and TV advertisements, online marketing tactics such as search engine marketing (SEM)
can more effectively raise awareness of an organisation's products and services among its target markets. Digital
marketing solutions are also perceived as more cost-effective, which has strongly contributed to industry revenue
growth over the past five years.
SEM encapsulates search engine optimisation and pay-per-click advertising, both of which improve the visibility of
the client's online platforms in a search engine's results page. This has remained the most popular form of digital
advertising among businesses over the period, as it drives intent-laden consumer traffic to websites and online
stores. As businesses have increasingly used SEM tactics to compete, demand has risen for more sophisticated
search engine marketing services over the past five years. These include data-driven strategies that use information
from search engine tools such as Google Analytics to create more personalised, relevant and timely SEM
campaigns, and ensure that they are bidding optimal amounts on keywords.
SOCIAL MEDIA MARKETING
Social media marketing refers to the use of social media platforms, such
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as Snapchat and Instagram, to promote products, services and events.
More businesses require a social media presence across multiple platforms to maintain their brand awareness
among the Australian public, given the amount of web traffic these networks attract. In addition, businesses that
market their brands through SEM tactics are often encouraged to create social media accounts to boost their
visibility on search engines. Demand for these services remained strong in 2019-20 and 2020-21, despite the
COVID-19 outbreak and an anticipated small decline in this service segment's portion of revenue.
Social media platforms give advertisers access to the vast amounts of data accumulated from their users' online
activities to increase the effectiveness of marketing. Facebook, which has approximately 2.9 billion monthly active
users, allows advertisers to pick the type of people they want to show their marketing material to, based on criteria
such as age, gender and location. It also provides tools such as relevance scores to help advertisers evaluate how
engaging their ads are among target demographics.
More clients have required online marketing campaigns across multiple social media platforms over the past five
years. This trend has fuelled demand growth for digital advertising solutions. As various social media platforms
attract different kinds of users, clients seek the assistance of digital advertising agencies to create ads and content
that are both appropriate for the platform's audience and consistent with the organisation's brand or message.
Industry players also provide clients with research regarding which social media platforms are most likely to reach
their target demographics and how to optimise their relevance scores on each platform.
INDUSTRY DRIVERS
The number of internet connections has risen over the past five years,
increasing the industry's reach among Australian households and making
digital advertising solutions more appealing.
Due to the rising volume of domestic internet traffic generated by mobile devices, many of the industry's clients are
increasingly focusing on mobile advertising. The ubiquity of smartphones and the improved ability to send
geographically targeted advertisements has increased demand for mobile SEM advertising campaigns, particularly
from location-sensitive businesses such as restaurants and retailers.
Demand for digital advertising solutions has grown significantly over the past five years, despite the COVID-19
pandemic in 2019-20 and 2020-21. This growth in demand has boosted industry profitability, and contributed to
strong growth in industry enterprise numbers and employment. Compared with advertising agencies that specialise
in print and TV mediums, industry players can take on additional demand with a lower associated rise in costs due
to the industry's online business model. Low barriers to entry and growing profit margins have encouraged new
players to enter the industry, boosting industry participation over the past five years. Average wages have remained
relatively high over the period, due to the industry's growing need to hire employees skilled in IT functions such as
mobile website optimisation and VR application coding.
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Historical Performance Data
Revenue
($m)
IVA
($m)
Establishments
(Units)
Enterprises
(Units)
Employment
(Units)
Exports
($m)
Imports
($m)
Wages
($m)
Domestic
Demand
($m)
2012-13
860
467
1,637
1,565
3,345
N/A
N/A
323
N/A
2013-14
1,007
550
1,860
1,780
3,956
N/A
N/A
383
N/A
2014-15
1,214
686
2,592
2,483
5,603
N/A
N/A
545
N/A
2015-16
1,583
796
2,615
2,507
5,733
N/A
N/A
561
N/A
2016-17
1,704
898
2,994
2,873
6,670
N/A
N/A
656
N/A
2017-18
1,857
1,059
3,338
3,207
7,512
N/A
N/A
736
N/A
2018-19
2,123
1,203
3,761
3,616
8,588
N/A
N/A
827
N/A
2019-20
2,150
1,170
3,785
3,643
8,674
N/A
N/A
841
N/A
2020-21
2,244
1,239
3,881
3,739
8,979
N/A
N/A
880
N/A
2021-22
2,476
1,375
4,117
3,970
9,719
N/A
N/A
966
N/A
Year
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Industry Outlook
Outlook
The Digital Advertising Agencies industry's revenue is projected to
continue expanding strongly over the five years through 2026-27.
The growing adoption of new hardware through which advertising can be transmitted, such as virtual reality
headsets and smartwatches, is likely to support this growth. The need for companies to circumvent digital marketing
obstacles such as ad blocking will also fuel demand for industry services. Enterprise numbers are projected to rise
strongly over the period as the industry is in the growth stage of its economic life cycle. Many new players are likely
to emphasise largely untapped mediums such as wearable technologies. Average wages are forecast to rise over
the next five years, as industry players increasingly hire workers that are skilled in programming and can design
marketing materials compatible with emerging mediums.
Revenue growth is anticipated to be higher over the next five years than for the previous five-year period as the
economy recovers from the COVID-19 pandemic, and demand for industry services increases at a fast pace.
However, the industry is forecast to start approaching saturation. The growing ease with which online ads can be
bought and managed directly by downstream businesses will likely start to dampen demand for industry services
after the five-year period through 2026-27. In addition, profit margin growth is projected to slow over the period as
the industry becomes more competitive across all product segments. Overall, industry revenue is forecast to
increase at an annualised 8.8% over the five years through 2026-27, to reach $3.8 billion.
NEW CHANNELS
The number of channels through which digital marketing material can be
displayed is forecast to rise over the next five years.
The number of social media applications offering advertising space to businesses is also anticipated to increase.
Snapchat, an image and video messaging app with more than 300 million daily active users, has been expanding its
offerings to advertisers. The platform has increased the volume of advertising space on its Discover feed, and has
been publishing Sponsored Lenses, where businesses can market their brands through interactive company-specific
Snapchat filters. These trends are likely to increase demand for social media marketing services, with companies
demanding ads that are more mobile-centric and customised to individual users.
Industry players will have to adapt to the growing need for digital marketing solutions on newer mediums such as
VR, wearable technologies (such as smartwatches) and devices designed to facilitate the internet of things. Over the
next five years, more organisations are likely to seek the assistance of digital advertising agencies to create VR ads,
which can be imbedded at natural breaks during VR content consumption (such as between game levels). More
industry firms are anticipated to specialise in this field over the period, developing new advertising strategies for
clients to reach customers.
A rise in both the volume of data shared between devices and number of content-viewing mediums will provide more
avenues for digital advertising agencies to help businesses remarket their products and services. Advertisers will
potentially be able to use data gathered from smart home technologies such as internet-enabled thermostats and
refrigerators to monitor user environments, and send relevant ads to content viewed on their smartphones or
smartwatches. However, households may not be willing to permit such high levels of data sharing between devices,
which may impede the widespread adoption of these marketing techniques. Digital advertising agencies will also
have to gauge consumer interest in receiving ads in this format to avoid oversaturating a client's brand exposure and
tarnishing its public image.
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AD BLOCKING
Digital advertising agencies may have to restructure or re-evaluate their
marketing solutions and business models over the next five years,
depending on how internet content consumption trends progress.
Ad blockers have grown increasingly prevalent over the past five years, making many businesses sceptical about
the effectiveness of online marketing solutions. With use of ad blockers projected to rise, industry players are
forecast to pursue other digital mediums to exhibit their advertising. This is likely to encourage both digital
advertising agencies and clients to optimise more digital advertising materials for viewing on smartphones and
tablets over the period.
Performance Outlook Data
Year
Revenue
($m)
IVA
($m)
Establishments
(Units)
Enterprises
(Units)
Employment
(Units)
Exports
($m)
Imports
($m)
2021-22
2,476
1,375
4,117
2022-23
2,743
1,523
4,379
2023-24
2,992
1,666
2024-25
3,245
2025-26
3,970
9,719
N/A
N/A
966
N/A
4,227
10,557
N/A
N/A
1,065
N/A
4,614
4,458
11,326
N/A
N/A
1,157
N/A
1,805
4,843
4,684
12,091
N/A
N/A
1,250
N/A
3,503
1,948
5,070
4,908
12,862
N/A
N/A
1,345
N/A
2026-27
3,766
2,085
5,293
5,129
13,633
N/A
N/A
1,441
N/A
2027-28
4,031
2,234
5,517
5,346
14,402
N/A
N/A
1,537
N/A
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Wages
Domestic
($m) Demand ($m)
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Industry Life Cycle
The life cycle stage of this industry is
March 2022
Growth
LIFE CYCLE REASONS
The industry is growing at a faster rate than the overall economy
Industry participation is anticipated to continue rising
The industry is characterised by a high level of technological change
The Digital Advertising Agencies industry is in the growth phase of its life cycle. The ongoing evolution of digital
marketing solutions as the preferred means of marketing for many organisations has largely driven the industry's
growth. Businesses and government organisations have become increasingly aware of the industry's ability to reach
clients' target audiences with greater efficiency compared with traditional marketing mediums such as print and TV.
The rise in IT and telecommunications adoption over the past five years has also expanded the industry's potential
market size, with more businesses (that traditionally lacked an online presence) demanding industry services.
Over the 10 years through 2026-27, industry value added, which measures an industry's contribution to the overall
economy, is projected to increase by an annualised 8.8%. The industry is therefore expected to significantly
outperform Australia's overall annualised GDP growth of 2.3% over the same period. This indicates that the
industry's contribution to the overall economy is growing. Given its low barriers to entry, establishment numbers are
anticipated to rise over the next five years, with many new entrants capitalising on emerging trends in online
marketing such as ad blocker bypass.
A high degree of technological change also characterises the industry. Growing usage of mobile apps and social
media among the general public has enhanced the number of mediums through which digital advertising agencies
can exhibit their marketing solutions. A projected rise in the number of internet connections over the next five years
will likely expand the industry's reach, further enticing businesses to use online advertising. In addition, popular
messaging platforms such as Snapchat and Instagram are increasingly allowing companies to send messages to its
user networks, boosting the exposure of online marketing materials. Furthermore, the growing adoption of wearable
technology, such as smartwatches, fitness trackers and virtual reality headsets present new platforms through which
digital advertisements can be viewed.
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Products & Markets
Supply Chain
Key Buying Industries
Key Selling Industries
1st Tier
1st Tier
Clothing Retailing in Australia
Internet Publishing and Broadcasting in Australia
Motor Vehicle Dealers in Australia
2nd Tier
Real Estate Services in Australia
Motion Picture and Video Production in Australia
Computer and Software Retailing in Australia
Products & Services
Industry firms perform a range of digital advertising services for
downstream customers.
These services include search engine marketing, creating digital advertising content, and additional services such
as advertising for classifieds. There have been only small changes in the relative sizes of these service segments
over the past five years.
SEARCH ENGINE MARKETING
Industry operators generate the largest proportion of revenue from search
engine marketing (SEM) services.
This form of marketing involves increasing the visibility of a website on popular search engines, such as Google.
SEM largely consists of search engine optimisation (SEO). SEO involves improving the visibility of a website on
search engines by increasing its ranking on the search results page, using methods such as including keywords on
the website. Another SEM activity is pay-per-click (PPC) advertising. PPC is a SEM model through which an
advertiser pays a search engine's owner to place a link at the top of the search results page. The link is associated
with keywords and the advertiser typically pays the search engine owner every time the link is clicked. Overall, this
segment has decreased as a share of industry revenue over the past five years, due to slowing growth in SEO
demand.
DIGITAL ADVERTISING CONTENT
Digital advertising agencies also generate a significant proportion of
revenue through creating digital advertising content for clients and
buying media space to exhibit this content.
Industry operators typically create digital content under client specifications targeted at particular demographics.
Digital content can fall under a variety of forms, including banner adverts, video marketing, rich media and
sponsorship. Industry operators then purchase media space on key websites, such as social media channels like
Twitter and Facebook, and news websites such as news.com.au and The Sydney Morning Herald. Over the past
five years, demand for rich media has grown, as clients have been increasingly demanding innovative and
interesting advertising. As a result, this segment has increased as a share of industry revenue over the period.
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OTHER SERVICES
Industry operators also provide a range of other digital advertising
services for downstream clients.
These include advertising on classifieds such as Gumtree and eBay, email marketing campaigns, lead generation
and affiliate marketing management. Over the past five years, greater demand for innovative advertising techniques
on classifieds sites has supported this segment. Consequently, other services have increased as a share of industry
revenue over the period.
Demand
Determinants
A range of factors influence demand for digital advertising agencies.
For example, the advertising and promotional budgets of a range of Australian businesses is a key demand
determinant. When businesses have more certainty regarding their finances and the overall economy, as reflected in
positive business confidence, advertising and promotional budgets typically increase. This allows downstream
customers to allocate more money to advertising. This can either boost overall demand, with firms using a variety of
the industry's services, or boost demand for more expensive services, such as high-quality digital video content
creation. When businesses' opinions regarding their finances are weak, as reflected in negative business
confidence, advertising budgets are often cut, typically reducing demand growth for the industry. This occurred in
2019-20 and 2020-21 in response to the COVID-19 pandemic, resulting in a major slowdown in revenue growth for
the year.
As a digital industry, technology trends also influence demand. IT and telecommunications adoption has been rising
for over a decade, which has driven increases in online activity. As online activity rises, demand for digital
advertising agencies also grows. Downstream customers are increasingly choosing digital advertising over
traditional advertising, to capitalise on rising online activity. Technological developments also drive demand for the
industry. For example, smartphone technology has continued to expand and driven significant increases in mobilebased digital advertising. Over the next five years, advances in new technology, such as virtual reality, are expected
to continue boosting industry demand.
Major Markets
A variety of downstream markets require the services of digital
advertising agencies.
Specifications and target demographics vary among these downstream markets. Some downstream customers,
such as clothing retailers, often require industry operators to create digital advertising content, while other
downstream customers, such as companies in automotive industries, might require the industry's services to
advertise through online classifieds.
RETAILERS
Collectively, retailers are the industry's largest individual downstream
market.
A variety of retailers go through digital advertising agencies to promote their products online and drive demand.
These include clothing, footwear, furniture, and watch and jewellery retailers. Retailers often advertise through a
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variety of platforms, as retail products have broad target demographics. Retailers are increasingly turning to industry
participants to help create exciting and distinctive online advertising to gain a competitive advantage in the growing
digital marketplace. Despite this, the retailers market has fallen as a share of industry revenue over the past five
years. This is due to weakness across the sector over the period, particularly in 2019-20 in response to the
COVID-19 pandemic.
AUTOMOTIVE COMPANIES
Automotive businesses that use the industry's services include motor
vehicle wholesalers and retailers, and car classifieds companies.
Consumers are becoming increasingly confident in purchasing big-ticket items, such as cars, through online
channels. In addition, consumers now frequently look up motor vehicle information online. However, demand from
this market has declined over the past five years, with demand from motor vehicle dealers decreasing as a
proportion of industry revenue. Due to the COVID-19 pandemic, demand for motor vehicles declined greatly in
2019-20.
FINANCIAL SERVICES COMPANIES
A range of companies in financial service industries, such as commercial
banks and credit agencies, use digital advertising agencies to connect
with potential buyers and customers.
Firms in this market largely require search engine marketing and banner adverts in online newspapers such as the
Australian Financial Review. This market requires less innovative digital advertising methods, as digital advertising
content such as rich media and video formats is expected to be less effective in driving consumers' financial
purchasing decisions. At a projected 13.4% of revenue in 2021-22, this market has declined as a portion of revenue
over the past five years.
REAL ESTATE COMPANIES
Real estate companies are significant users of the industry's services.
This market demands services such as creating and purchasing media space for display advertising, email
marketing and digital classified advertising. Over the past five years, intensifying competition in the Real Estate
Services industry has encouraged companies in this market to use digital advertising agencies to gain a competitive
advantage. With the real estate sector expanding over the past five years, this market has increased as a portion of
industry revenue.
TELECOMMUNICATIONS FIRMS
Telecommunications companies include Telstra, Optus, Vodaphone and
TPG.
These firms use a range of search engine optimisation and digital advertising services to reach customers. A focus
on pricing and service deals is often used in digital advertising campaigns by telecommunications companies. In the
current year, this market is anticipated to account for 8.6% of revenue. This is down as a portion of revenue over the
past five years, due to limited pricing growth for firms in this market.
LEISURE AND TRAVEL COMPANIES
Accounting for a projected 7.2% of revenue in 2021-22, leisure and travel
companies engage digital advertising agencies to promote their
businesses.
Companies such as Qantas, Trivago and Webjet are major users of digital advertising services to reach new
customers and retain existing ones. This market is projected to have declined as a portion of revenue over the past
five years, due to weaker demand in 2019-20 and 2020-21 in response to the COVID-19 pandemic.
CONSUMER ELECTRONICS AND COMPUTER FIRMS
Consumer electronics and computer firms include Apple, Microsoft and
Samsung.
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These types of companies use digital advertising services to attract new customers and to poach customers from
their competitors. This market is projected to make up 7.0% of revenue in the current year. Due to growing demand
for consumer electronics and computers, this market is projected to have increased as a proportion of revenue over
the past five years.
OTHER SECTORS
A range of firms and organisations in other industries require digital
advertising services.
These include pharmaceutical and healthcare entities, media firms, and entertainment companies. In addition,
government and public-sector institutions also use digital advertising agencies to promote services or distribute
information. Over the past five years, greater demand compared with other markets for the industry's more
expensive services, such as digital video content creation, has increased this market's as a share of industry
revenue.
Exports in this industry are
Low and Steady
Imports in this industry are
Low and Steady
As the Digital Advertising Agencies industry is service-based, no international trade takes place through imports and
exports. In addition, most industry operators service the domestic market. However, some players, such as WPP,
offer their services to overseas clients in countries such as New Zealand. In addition, several larger players in the
industry, such as Omnicom Media Group, are local subsidiaries of global advertising agencies.
Business
Locations
The geographical distribution of industry participants largely correlates with Australia's population distribution and business
activity. Consequently, most industry operators are based in the eastern seaboard states of New South Wales, Victoria and
Queensland. In particular, the high levels of business activity in Sydney and Melbourne, coupled with these states having larger
proportions of the population, mean that New South Wales and Victoria account for over two-thirds of industry participants. IT and
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telecommunications adoption is also greatest in these two states, and many new entrants set up in Sydney and Melbourne to
access a greater pool of potential clients.
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Competitive Landscape
Market Share
Concentration
Concentration in this industry is
Low
The Digital Advertising Agencies industry displays low market share concentration, with the four largest operators
projected to account for approximately 21% of industry revenue in 2021-22. Many small-scale firms have entered
the industry over the past five years, encouraged by rising demand for digital advertising agencies and the industry's
low barriers to entry. In addition, many larger traditional advertising companies have developed digital capabilities
over the period. Consequently, the industry is fragmented, with operators of various sizes and specialties. Industry
concentration has declined over the past five years. This is due to the major firms such as WPP and Interpublic
having expanded at a slower rate than the large number of small and mid-size specialist firms in the industry. This
declining concentration trend is projected to continue over the five years through 2026-27.
Key Success
Factors
IBISWorld identifies 250 Key Success Factors for a business. The most important for this industry are:
Ability to effectively communicate and negotiate:
Agencies that can effectively demonstrate innovative and effective advertising strategies typically secure more
valuable contracts, often on a repeat basis.
Marketing of differentiated products:
Industry operators that offer clients a range of digital advertising services can create a diverse and varied client
base. A diverse client base reduces the risk of revenue declines from a sudden drop in demand from a particular
market.
Access to highly skilled workforce:
Digital advertising agencies that have a highly skilled workforce can improve the quality of service offered to clients,
which can support repeat business and generate new demand.
Having a loyal customer base:
Industry operators that maintain a loyal customer base through strong client satisfaction can benefit from repeat
work and word-of-mouth recommendations.
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Cost Structure
Benchmarks
Profit
Industry profitability has increased over the past five years, despite the
COVID-19 pandemic limiting revenue demand and growth in 2019-20
and 2020-21. The average industry profit margin is estimated at 14.8%
in the current year. The rising popularity of online advertising strategies
as a marketing tactic among private and public organisations has
primarily driven this profit growth. As most industry services are
delivered through the internet, industry operators can generate higher
revenue with a significantly lower than proportional rise in costs. Digital
advertising agencies have also capitalised on the increasing availability
of platforms through which their marketing solutions can be displayed.
These platforms include mobile ads on gaming apps, banner ads on
more websites, and ads developed for VR headsets and similar
specialist applications. These technological factors have allowed
industry operators to capture higher margins from marketing campaigns
over the past five years.
Wages
Wages are the industry's largest expense. Advertising agencies
generally hire workers for a variety of specialised tasks, including
account management, market research, creative development, media
buying and monitoring campaign results. Digital advertising agencies
also require some workers to be proficient in search engine
optimisation, digital graphics design, web page design and social media
marketing. As a result, industry employees often command higher
average wages than those in advertising agencies specialising in other
marketing mediums such as print and TV. The rising complexity of new
technologies (such as software for big data analysis) and emerging
trends in digital marketing (such as ad blocker bypass) have increased
the need for workers with specialised IT skills. As a result, wage costs
have risen as a share of industry revenue over the past five years.
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Purchases
Industry operators purchase media time and advertising space on
multiple digital platforms, including content-specific websites and social
media platforms such as Facebook and Twitter. Agencies that manage
entire digital advertising campaigns for their clients generally look to
place these advertisements across a range of online platforms to boost
the exposure of the client's brand to its intended markets. In addition,
many smaller agencies do not have in-house market research services
to gauge a client's target audience and instead pay for external market
research. Although these charges are typically billed to the client, they
represent an expense for the industry. Despite digital advertisements
being exhibited through an increasing number of mediums, purchase
costs have declined as a portion of revenue over the past five years, as
revenue growth has outpaced growth in purchase costs over the period.
Depreciation
Depreciation expenses include office fixtures, computer equipment, and
software for big data analysis and graphic design. In 2021-22,
depreciation is projected to account for 1.7% of industry revenue.
Depreciation has increased as a share of industry revenue over the
past five years. Investment in capital equipment and new computerrelated technologies has grown at a faster rate than industry revenue
over the period.
Rent
Digital advertising agencies rent office space and other buildings to
conduct business. These rental costs are estimated to make up 3.5% of
industry revenue in the current year. Rent expenses have increased as
a share of revenue over the past five years, due to extensive
requirements for office space, and with property values rapidly rising.
Utilities
Utility expenses primarily consist of electricity, internet, telephone and
other bills. In 2021-22, utility costs are anticipated to account for 3.5%
of industry revenue. These costs have remained stable as a share of
revenue over the past five years, as revenue growth has increased at a
similar pace as expenditure on utilities.
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Other Costs
Other costs include marketing, communications, administration,
accounting and other office-related expenses. Marketing helps maintain
a positive reputation and attract lucrative clients. Industry players have
also had to increasingly invest in services such as Google AdWords to
boost their visibility among industry competitors and generate new
business. Overall, other costs have decreased as a share of industry
revenue over the past five years, due to smaller increases in these
costs compared with revenue increases.
Basis of
Competition
Competition in this industry is
Medium and the trend is Increasing
The Digital Advertising Agencies industry is moderately competitive.
Internally, industry operators compete to secure valuable and repeat contracts with clients, typically competing
based on price, output quality and the number of services offered. Externally, industry operators face pressure from
the growing number of companies that have an in-house advertising team. Competition has increased over the past
five years, partly due to the rising number of enterprises in the industry.
INTERNAL COMPETITION
Internally, industry operators primarily compete to secure contracts with
potential clients.
Some industry operators compete based on price, often charging lower prices to attract demand. These operators
typically rely on a quick turnover of work to generate revenue. The time it takes for an agency to complete a project
or show the benefits of a digital advertising campaign can also differentiate an agency from its competitors, with
some clients prioritising the speediness of an agency's work over other attributes. Quality and the number of
services offered are other key competitive factors. Digital advertising agencies that have a history of high-quality
work across a range of services, such as search engine optimisation and digital video content creation, can typically
secure valuable contracts with clients, often on a repeat basis.
EXTERNAL COMPETITION
External industry competition is moderate.
Companies that have their own in-house advertising team limit demand for the industry's services. Businesses are
increasingly hiring digital advertising employees or training existing marketing staff in digital advertising, to save on
long-term costs. This trend can stifle demand for industry services.
Barriers to
Entry
25
Barriers to Entry in this industry are
Low and the trend is Increasing
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The Digital Advertising Agencies industry has low barriers
to entry, despite these increasing over the past five years.
Setting up a digital advertising agency is inexpensive, with
only initial computer equipment needed to operate. In
addition, many industry players rent premises instead of
purchasing them to house staff or meet clients, keeping
initial start-up costs down. Some operators also conduct
client meetings and digital advertising activities online
from their place of residence. However, expansion in the
industry requires greater capital investment, as more
electronic equipment and office space is typically
required.
Industry
Globalization
Barriers to Entry Checklist
Competition
Concentration
Life Cycle Stage
Medium
Low
Growth
Technology Change
High
Regulation & Policy
Medium
The presence of large global companies in the industry,
Industry Assistance
such as WPP AUNZ, Interpublic Australia and Omnicom
Media Group, can provide a barrier to entry for new
companies, and those looking to expand. These large
companies often secure valuable contracts with large
clients, often retaining them for repeat business. The
ability to secure and retain clients can be another barrier
to entry. More traditional advertising agencies have
moved into the digital marketplace over the past five
years, increasing industry competition. Consequently, the
industry's barriers to entry have also risen over the period.
Low
Globalization in this industry is
Medium and the trend is Increasing
Although no international trade occurs in the Digital Advertising Agencies industry, globalisation is at a moderate
level. The industry's major players, WPP AUNZ, Interpublic Australia and Omnicom Media Group, are local
subsidiaries of global advertising agencies. Outside of the major players, several other global advertising
companies, such as Publicis Communication, are included in the industry. Over the past five years, industry-wide
globalisation has risen slightly, due to the growing penetration of multinational advertising agencies.
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Major Companies
Major Players
WPP AUNZ LTD
Market Share: 7.4%
Brand Names adcastNXT, AKQA, Aleph, Buchanan,
Haylix, Ogilvy, VMLY&R, whiteGREY, Wunderman
Thompson
WPP AUNZ LTD is the local subsidiary of the of England-based WPP plc, a multinational advertising and public
relations company. The Australian firm generates its revenue through providing marketing, content and
communications services to a range of clients. The company was formed in early 2016, after the merger of STW
Communications Group Limited and WPP Holdings. WPP AUNZ operates in the industry through the digital
advertising operations undertaken several digital advertising subsidiaries. These digital-focused entities provide
clients with a variety of promotion services across a range of digital formats.
Financial performance
WPP AUNZ's industry-related revenue is projected to increase at an annualised 5.2% over the five years through
December 2022, to total $208.6 million. This growth represents an underperformance of the overall industry, due to
a revenue fall in 2020 in response to the COVID-19 pandemic. However, the company has recognised the growing
potential of digital advertising and has expanded its industry-related operations over the past five years. In
addition, WPP AUNZ benefits from its global reputation, which helps it secure valuable contracts with large
companies. WPP AUNZ's industry-specific profit margins are projected to be lower than the industry average due to
slower revenue growth over the past five years.
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WPP AUNZ LTD - industry segment performance*
Year**
Revenue
($m)
Growth
(% change)
2012
35.1
N/C
2013
43.7
24.5
2014
51.9
18.8
2015
62.4
20.2
2016
135.4
117.0
2017
161.9
19.6
2018
173.9
7.4
2019
182.8
5.1
2020
169.5
-7.3
2021
184.7
9.0
2022
208.6
12.9
Source: IBISWorld
Note: *Estimate **Year end December
Omnicom Media Group Australia Pty Ltd
Market Share: 7.1%
Brand Names Clemenger BBDO, Redhanded, Marketforce
Omnicom Media Group Australia Pty Ltd is the Australian subsidiary of the US-based Omnicom Group, a global
media, marketing and corporate communications holding company. The Omnicom Group is split into subsidiaries,
which include three global advertising agency networks: BBDO, DDB and TBWA. In Australia, Omnicom Media
Group, through BBDO, owns a 73.7% stake in Clemenger Group Limited, which is the holding company for
Clemenger BBDO and approximately 25 other advertising, media, marketing and consulting firms in Australia and
New Zealand. Some of these advertising agencies, such as Clemenger BBDO, offer digital services to clients, such
as creating online content and developing digital strategies.
Financial performance
Omnicom Media Group's industry-related revenue is expected to increase at an annualised 15.1% over the five
years through December 2022, to reach $186.5 million. This represents an outperformance of the overall industry
over the past five years, despite the negative effects of the COVID-19 pandemic. The company has been heavily
focussed on developing its digital advertising services, driving revenue growth over the past five years. Omnicom
Media Group's industry-specific profitability has also increased over the period, due to rising demand for services
with higher profit margins, such as digital video content creation.
Omnicom Media Group Australia Pty Ltd - industry segment performance*
Year**
Revenue
($m)
Growth
(% change)
2012
27.6
N/C
2013
33.4
21.0
2014
38.5
15.3
2015
54.5
41.6
2016
68.5
25.7
2017
92.4
34.9
2018
125.2
35.5
2019
147.6
17.9
2020
163.6
10.8
2021
172.4
5.4
2022
186.5
8.2
Source: IBISWorld
Note: *Estimate **Year end December
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Interpublic Australia Holdings Pty Ltd
Market Share: 5.3%
Brand Names IPG Mediabrands, McCann, BPN, Initiative,
UM
Interpublic Australia Holdings Pty Ltd is the local subsidiary of the US-based Interpublic Group of Companies, Inc, a
global advertising and marketing services company. The Australian firm generates its revenue through advertising,
consulting and marketing services, public relations services and event management services. In Australia,
Interpublic operates as IPG Mediabrands through its subsidiaries, which include McCann, BPN, Ansible, Initiative
and UM. The firm operates in the industry through the digital advertising operations undertaken by these
subsidiaries. Interpublic is expanding its digital advertising capabilities, capitalising on rising demand for digital
advertising services.
Financial performance
Interpublic Australia's industry-related revenue is projected to increase at an annualised 0.8% over the five years
through December 2022, to $137.8 million. This trend includes a decline 2020 as demand for industry services was
stifled in response to the COVID-19 pandemic, which followed a revenue fall in 2019. The five-year growth rate
represents an underperformance of the overall industry over the past five years. Similar to WPP, the company has
benefited from its global reputation, securing many major clients. However, due to slow revenue growth over the
past five years, its industry-related profit margins are projected to be lower than the industry average.
Interpublic Australia Holdings Pty Ltd - industry segment performance*
Year**
Revenue
($m)
Growth
(% change)
2012
58.8
N/C
2013
77.1
31.1
2014
95.8
24.3
2015
110.3
15.1
2016
126.3
14.5
2017
132.1
4.6
2018
147.1
11.4
2019
123.1
-16.3
2020
105.8
-14.1
2021
121.6
14.9
2022
137.8
13.3
Source: IBISWorld
Note: *Estimate **Year end December
Other Companies
As IT and telecommunications adoption increases and technology develops, digital advertising solutions are
becoming increasingly important for companies and institutions. Many new firms have entered the industry to
capitalise on rising demand over the past five years, either through expanding a traditional advertising company or
creating a new firm from scratch. The industry's low barriers to entry have supported increased participation, with
the industry containing both local subsidiaries of global advertising companies and owner-operators.
Publicis Communication Pty Limited
Market Share: 2.0%
Brand Names: Publicis
Publicis Communication Pty Limited is the Australian subsidiary of the France-based Publicis Groupe SA, a
multinational advertising and public relations firm. The company generates its revenue through investing in and
operating advertising and media buying agencies. Over the past five years, it has focused on expanding its digital
advertising capabilities to capitalise on rising demand.
Webcentral Group Limited
Market Share: 2.0%
Brand Names: WME Group
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Webcentral Group Limited, named Arq Group Limited until May 2020, and formerly called Melbourne IT Ltd until
May 2018, provides digital, data, analytics and cloud computing services to its clients. Within the industry,
Webcentral owns and operates WME Group, which provides a range of digital marketing and search engine
optimisation and advertising services. WME Group specialises in providing these services to small and mid-size
clients in Australia and New Zealand. Founded in 2008, WME Group was acquired by the company in May 2017. It
has offices in Sydney and Melbourne.
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Operating Conditions
Capital
Intensity
The level of capital intensity is
Low
The Digital Advertising Agencies industry has a low level of
capital intensity. For every dollar spent on wages in
2021-22, an estimated $0.04 is projected to be invested in
computers and capital equipment. The industry primarily
relies on labour to provide its services, with wage costs
representing its largest expense. Aside from experience in
creative development, sales and client retention, digital
advertising agencies generally require workers to be skilled
in programming (for services such as search engine
optimisation), digital graphics design, and social media
marketing.
Capital investment in the industry is low, and includes
office fixtures, computer equipment and software used to
deliver digital marketing solutions to clients, and track how
effectively intended markets are being reached. The
industry's capital intensity has remained stable over the
past five years, as depreciation has increased as a portion
of revenue at the same rate as wages. Capital intensity is
anticipated to increase over the next five years, as wages
decline as a proportion of revenue, while depreciation
increases.
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Technology &
Systems
March 2022
Potential Disruptive Innovation: Factors Driving Threat of Change
Level
Factor
Disruptive
Effect
Description
Medium
Rate of
Innovation
Potential
A ranked measure for the number of patents
assigned to an industry. A faster rate of new
patent additions to the industry increases the
likelihood of a disruptive innovation occurring.
Low
Innovation
Concentration
Unlikely
A measure for the mix of patent classes
assigned to the industry. A greater
concentration of patents in one area increases
the likelihood of technological disruption of
incumbent operators.
High
Ease of Entry
Likely
A qualitative measure of barriers to entry.
Fewer barriers to entry increases the
likelihood that new entrants can disrupt
incumbents by putting new technologies to
use.
Very High
Rate of Entry
Very Likely
Annualized growth in the number of
enterprises in the industry, ranked against all
other industries. A greater intensity of
companies entering an industry increases the
pool of potential disruptors.
Very Low
Market
Concentration
Very
Unlikely
A ranked measure of the largest core market
for the industry. Concentrated core markets
present a low-end market or new market entry
point for disruptive technologies to capture
market share.
The rate of new patent additions to the industry is low. This is combined with a low concentration of innovation. Both factors
being low suggests that new technology entry is slow and widespread, which limits the threat of disruptive threats hurting
leading industry operators.
This technology trend is underscored by structural factors that support new entrants. An accommodative structure can
create a situation where small entrants can focus on less profitable albeit innovative industry entry points. Or, large
operators in other industries can leverage expertise in other areas to enter the industry from a new angle.
Major market segments for industry operators are relatively diversified. The spread of market segments suggests that there
are limited entry points other than those already served my incumbent operators.
Technology disruption has moderately affected the Digital Advertising
Agencies industry over the past decade.
Big data can assist digital ad campaigns, and businesses which have access to such data sets can have significant
advantages over their competition. Artificial intelligence (AI) has also been a significant disruptor, as firms which have
invested in AI are more easily able to process and gather data for marketing. Over the next five years, advances in AI are
expected to continue disrupting the industry, as algorithms for matching and gathering data are anticipated to become more
sophisticated.
The level of technology change is
High
The Digital Advertising Agencies industry exhibits high technological change.
Industry operators are benefiting from an increasingly expanding marketplace where digital advertising can occur. In
particular, the ongoing development of social media platforms, such as Instagram and Snapchat, has driven demand for
digital advertising on these platforms. Downstream markets are increasingly turning to digital advertising agencies to
market their products and services on social media platforms. Industry operators can track consumer demographics
through advertisement clicks on these platforms and analyse how advertisements drive consumers' purchasing behaviour.
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Rising IT and telecommunications adoption over the past decade has driven increased industry participation, as new
agencies have been set up to capitalise on rising online activity. These agencies perform a variety of tasks that help
downstream customers reach consumers through digital avenues. These include creating and purchasing media space for
display, banner and video advertisements, and search engine optimisation. Further, industry operators are increasingly
finding new mediums to advertise through. Augmented reality advertising content is a recent example of this. Many digital
advertising agencies are capitalising on advances in augmented reality, using the technology's immersive nature to provide
innovative and interesting ways to advertise brands.
Revenue
Volatility
The level of volatility is
Medium
Over the past five years, the Digital Advertising Agencies industry has
exhibited a moderate degree of revenue volatility.
Demand for industry services has increased at a strong pace, largely due to the rising popularity of online advertising
marketing among private and public organisations. Businesses have grown increasingly aware of the higher efficiency of
online advertisements in reaching target demographics (relative to traditional print and TV marketing mediums), raising
demand for internet-based marketing campaigns. However, a major demand and revenue slowdown for industry services in
2019-20 and 2020-21 due to the COVID-19 pandemic, in contrast to a surge in the previous year and an anticipated return
to strong growth in 2021-22, contributed to revenue volatility.
The number of internet connections has risen steadily over the past five years, adding to both the industry's market size
and the reach of online advertisements. This has also made online marketing more attractive for potential clients. In
addition, the industry's high rate of technological change has sustained its high growth rate, with clients demanding industry
services in line with the emergence of new digital channels, such as augmented reality.
Regulation &
Policy
The level of regulation is
Medium and the trend is Steady
The Digital Advertising Agencies industry comes under moderate regulatory
pressure, and this has remained largely steady over the past five years.
Regarding advertising content, the industry is largely self-regulated through the Advertising Standards Bureau's Advertising
Standards Board and Advertising Claims Board. These boards provide complaint resolution for a range of reasons including
the truth, accuracy and legality of advertising. The Australian Association of National Advertisers also has a range of codes
regarding several topics, such as advertising aimed at children.
The Australian Guideline for Online Behavioural Advertising is a self-regulated guideline developed by the Australian Digital
Advertising Alliance that is specific to the industry. The guideline is set up to support transparency and consumer
awareness and choice regarding digital advertising. For digital media buyers, regulation is less strict. However, media
buyers must consider the timing and placement of advertisements, particularly advertisements that would be sensitive to
children.
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MODERN SLAVERY ACT
In November 2018, the Federal Government passed the Modern Slavery Act
2018.
The act, which came into force on 1 January 2019, is a new reporting requirement for larger Australian businesses.
Companies that generate annual consolidated revenue of at least $100.0 million have to report on how they act to mitigate
the risks of modern slavery in their operations and supply chains. The NSW Government has also been considering its own
state-based version of the report, which would require businesses with consolidated annual revenue of at least $50.0
million to report. The NSW Modern Slavery Act 2018 was due to come into force on 1 July 2019, but was delayed for further
consultation on the day it was set to be implemented. The NSW Government has been attempting to introduce necessary
amendments to the NSW Act to establish greater harmonisation with the Commonwealth's Modern Slavery Act 2018. The
NSW Act commenced on 1 January 2022.
The Modern Slavery Act is not expected to greatly affect the Digital Advertising Agencies industry. However, as the act
applies to companies and their supply chain, there is a risk of industry firms supplying digital advertising services to
companies that engage in slavery. This risk is likely to mainly apply to digital advertising services supplied to local
companies with overseas operations that potentially engage in modern slavery practices. Furthermore, the act mainly
applies to the small number of larger companies that generate enough revenue above the required reporting thresholds.
Industry
Assistance
The level of industry assistance is
Low and the trend is Steady
The Digital Advertising Agencies industry receives little direct assistance, and
this has remained largely steady over the past five years.
The industry does not receive any form of government subsidies or grants. However, some industry operators benefit from
federal or state governments requiring digital advertising services, often for large projects. Industry operators also benefit
from being members of trade associations, such as the Interactive Advertising Bureau (IAB). The IAB was established in
2010, and its role is to support sustainable and diverse investment in digital advertising across all platforms in Australia.
Other industry associations include the Australian Association of National Advertisers and the Association for Data-Driven
Marketing & Advertising.
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Key Statistics
Industry Data
Revenue
($m)
IVA
($m)
Establishments
(Units)
Enterprises
(Units)
Employment
(Units)
Exports
($m)
Imports
($m)
Wages
($m)
Domestic
Demand ($m)
2012-13
860
467
1,637
1,565
3,345
N/A
N/A
323
N/A
2013-14
1,007
550
1,860
1,780
3,956
N/A
N/A
383
N/A
2014-15
1,214
686
2,592
2,483
5,603
N/A
N/A
545
N/A
2015-16
1,583
796
2,615
2,507
5,733
N/A
N/A
561
N/A
2016-17
1,704
898
2,994
2,873
6,670
N/A
N/A
656
N/A
2017-18
1,857
1,059
3,338
3,207
7,512
N/A
N/A
736
N/A
2018-19
2,123
1,203
3,761
3,616
8,588
N/A
N/A
827
N/A
2019-20
2,150
1,170
3,785
3,643
8,674
N/A
N/A
841
N/A
2020-21
2,244
1,239
3,881
3,739
8,979
N/A
N/A
880
N/A
2021-22
2,476
1,375
4,117
3,970
9,719
N/A
N/A
966
N/A
2022-23
2,743
1,523
4,379
4,227
10,557
N/A
N/A
1,065
N/A
2023-24
2,992
1,666
4,614
4,458
11,326
N/A
N/A
1,157
N/A
2024-25
3,245
1,805
4,843
4,684
12,091
N/A
N/A
1,250
N/A
2025-26
3,503
1,948
5,070
4,908
12,862
N/A
N/A
1,345
N/A
2026-27
3,766
2,085
5,293
5,129
13,633
N/A
N/A
1,441
N/A
Year
Annual Change
Year
Revenue
(%)
IVA
(%)
Establishments
(%)
Enterprises
(%)
Employment
(%)
Exports
(%)
Imports
(%)
Wages
(%)
Domestic
Demand (%)
2012-13
20.3
16.4
4.93
5.03
14.5
N/A
N/A
13.9
N/A
2013-14
17.1
17.8
13.6
13.7
18.3
N/A
N/A
18.3
N/A
2014-15
20.6
24.8
39.4
39.5
41.6
N/A
N/A
42.5
N/A
2015-16
30.4
16.1
0.88
0.96
2.32
N/A
N/A
2.86
N/A
2016-17
7.67
12.7
14.5
14.6
16.3
N/A
N/A
16.9
N/A
2017-18
8.95
18.0
11.5
11.6
12.6
N/A
N/A
12.3
N/A
2018-19
14.4
13.6
12.7
12.8
14.3
N/A
N/A
12.3
N/A
2019-20
1.25
-2.71
0.63
0.74
1.00
N/A
N/A
1.72
N/A
2020-21
4.39
5.84
2.53
2.63
3.51
N/A
N/A
4.55
N/A
2021-22
10.3
11.0
6.08
6.17
8.24
N/A
N/A
9.84
N/A
2022-23
10.8
10.8
6.36
6.47
8.62
N/A
N/A
10.2
N/A
2023-24
9.10
9.38
5.36
5.46
7.28
N/A
N/A
8.66
N/A
2024-25
8.44
8.34
4.96
5.06
6.75
N/A
N/A
8.02
N/A
2025-26
7.96
7.88
4.68
4.78
6.37
N/A
N/A
7.57
N/A
2026-27
7.49
7.03
4.39
4.50
5.99
N/A
N/A
7.11
N/A
Key Ratios
Year
IVA/Revenue
(%)
Imports/
Demand
(%)
Exports/
Revenue
(%)
Revenue per
Employee
($'000)
Wages/
Revenue
(%)
Employees per
estab.
(Units) Average Wage ($)
2012-13
54.3
N/A
N/A
257
37.6
2.04
96,622
2013-14
54.6
N/A
N/A
255
38.0
2.13
96,689
2014-15
56.5
N/A
N/A
217
44.9
2.16
97,269
2015-16
50.3
N/A
N/A
276
35.4
2.19
97,785
2016-17
52.7
N/A
N/A
255
38.5
2.23
98,276
2017-18
57.1
N/A
N/A
247
39.7
2.25
98,017
2018-19
56.6
N/A
N/A
247
39.0
2.28
96,309
2019-20
54.4
N/A
N/A
248
39.1
2.29
97,003
2020-21
55.2
N/A
N/A
250
39.2
2.31
97,973
2021-22
55.5
N/A
N/A
255
39.0
2.36
99,424
2022-23
55.5
N/A
N/A
260
38.8
2.41
100,881
2023-24
55.7
N/A
N/A
264
38.7
2.45
102,181
2024-25
55.6
N/A
N/A
268
38.5
2.50
103,399
2025-26
55.6
N/A
N/A
272
38.4
2.54
104,564
2026-27
55.4
N/A
N/A
276
38.3
2.58
105,670
Figures are inflation adjusted to 2021-22
35
IBISWorld.com
Digital Advertising Agencies in Australia
March 2022
Additional Resources
Additional
Resources
Interactive Advertising Bureau
http://www.iabaustralia.com.au
AdNews
http://www.adnews.com.au
Australian Association of National Advertisers
http://www.aana.com.au
Association for Data-Driven Marketing & Advertising
http://www.adma.com.au
Industry Jargon
INTERNET OF THINGS
The network of physical objects (devices, vehicles, home appliances and other items) embedded with software,
sensors, and network connectivity that enables these objects to connect and exchange data.
RICH MEDIA
A digital advertisement that uses advanced features such as video, audio, or other elements that encourage viewers
to interact and engage with the content.
VIRTUAL REALITY (VR)
A type of computer technology that can simulate three-dimensional environments and allows users to engage with
such environments through specialised hardware such as a helmet with a screen inside.
Glossary
BARRIERS TO ENTRY
High barriers to entry mean that new companies struggle to enter an industry, while low barriers mean it is easy for
new companies to enter an industry.
CAPITAL INTENSITY
Compares the amount of money spent on capital (plant, machinery and equipment) with that spent on labour.
IBISWorld uses the ratio of depreciation to wages as a proxy for capital intensity. High capital intensity is more than
$0.333 of capital to $1 of labour; medium is $0.125 to $0.333 of capital to $1 of labour; low is less than $0.125 of
capital for every $1 of labour.
CONSTANT PRICES
The dollar figures in the Key Statistics table, including forecasts, are adjusted for inflation using the current year (i.e.
year published) as the base year. This removes the impact of changes in the purchasing power of the dollar, leaving
only the 'real' growth or decline in industry metrics. The inflation adjustments in IBISWorld’s reports are made using
the Australian Bureau of Statistics' implicit GDP price deflator.
DOMESTIC DEMAND
Spending on industry goods and services within Australia, regardless of their country of origin. It is derived by
adding imports to industry revenue, and then subtracting exports.
EMPLOYMENT
The number of permanent, part-time, temporary and casual employees, working proprietors, partners, managers
and executives within the industry.
ENTERPRISE
A division that is separately managed and keeps management accounts. Each enterprise consists of one or more
establishments that are under common ownership or control.
ESTABLISHMENT
The smallest type of accounting unit within an enterprise, an establishment is a single physical location where
business is conducted or where services or industrial operations are performed. Multiple establishments under
common control make up an enterprise.
EXPORTS
Total value of industry goods and services sold by Australian companies to customers abroad.
IMPORTS
Total value of industry goods and services brought in from foreign countries to be sold in Australia.
INDUSTRY CONCENTRATION
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IBISWorld.com
Digital Advertising Agencies in Australia
March 2022
An indicator of the dominance of the top four players in an industry. Concentration is considered high if the top
players account for more than 70% of industry revenue. Medium is 40% to 70% of industry revenue. Low is less
than 40%.
INDUSTRY REVENUE
The total sales of industry goods and services (exclusive of excise and sales tax); subsidies on production; all other
operating income from outside the firm (such as commission income, repair and service income, and rent, leasing
and hiring income); and capital work done by rental or lease. Receipts from interest royalties, dividends and the sale
of fixed tangible assets are excluded.
INDUSTRY VALUE ADDED (IVA)
The market value of goods and services produced by the industry minus the cost of goods and services used in
production. IVA is also described as the industry's contribution to GDP, or profit plus wages and depreciation.
INTERNATIONAL TRADE
The level of international trade is determined by ratios of exports to revenue and imports to domestic demand. For
exports/revenue: low is less than 5%; medium is 5% to 20%; and high is more than 20%. Imports/domestic demand:
low is less than 5%; medium is 5% to 35%; and high is more than 35%.
LIFE CYCLE
All industries go through periods of growth, maturity and decline. IBISWorld determines an industry's life cycle by
considering its growth rate (measured by IVA) compared with GDP; the growth rate of the number of establishments;
the amount of change the industry's products are undergoing; the rate of technological change; and the level of
customer acceptance of industry products and services.
NONEMPLOYING ESTABLISHMENT
Businesses with no paid employment or payroll, also known as nonemployers. These are mostly set up by selfemployed individuals.
PROFIT
IBISWorld uses earnings before interest and tax (EBIT) as an indicator of a company’s profitability. It is calculated as
revenue minus expenses, excluding interest and tax.
VOLATILITY
The level of volatility is determined by averaging the absolute change in revenue in each of the past five years.
Volatility levels: very high is more than ±20%; high volatility is ±10% to ±20%; moderate volatility is ±3% to ±10%;
and low volatility is less than ±3%.
WAGES
The gross total wages and salaries of all employees in the industry.
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IBISWorld.com
Digital Advertising Agencies in Australia
March 2022
Call Preparation Questions
Role Specific
Questions
Sales & Marketing
How dependent is your company on the retail sector?
The retailers market is expected to account for 21% of industry revenue in the current year.
Retailers are increasingly turning to industry participants to help create exciting and distinctive online advertising to
gain a competitive advantage in the growing digital marketplace.
How diverse is your range of digital advertising services?
Digital advertising agencies can offer clients a range of services, such as search engine marketing and creating
digital advertising content across a range of mediums.
Some agencies focus on particular service segments or mediums, while larger ones tend to offer advertising
services across a range of mediums.
Strategy & Operations
Which markets does your advertising agency service?
Some advertising agencies focus on particular markets, such as car retailing or fashion advertising.
Larger agencies often provide advertising services to a range of markets, which can insulate them from fluctuations
in downstream market demand.
What additional areas can your company expand into?
Industry operators are increasingly finding new advertising mediums.
Virtual reality advertising content is a recent example of this.
Technology
How much of a financial effect has high technological change had on your business?
The Digital Advertising Agencies industry exhibits high technological change.
Due to this high level of technological change, industry operators must continue keeping abreast of developments in
technology to remain competitive.
What software does your company make use of?
Industry operators use software to deliver digital marketing solutions to clients and track how effectively intended
markets are being reached.
Compliance
What industry associations are you aligned with?
Industry operators benefit from being members of trade associations, such as the Interactive Advertising Bureau
(IAB).
The IAB was established in 2010, and its role is to support sustainable and diverse investment in digital advertising
across all platforms in Australia.
What type of base regulations are industry operators expected to comply with?
Regarding advertising content, the industry is largely self-regulated through the Advertising Standards Bureau's
Advertising Standards Board and Advertising Claims Board.
The Australian Association of National Advertisers also has a range of codes regarding several topics, such as
advertising aimed at children.
Finance
How have wages costs affected your profit margins?
Wages are expected to account for 38.9% of revenue in 2018-19.
Wage costs have risen as a share of revenue over the past five years, as the rising complexities of new
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Digital Advertising Agencies in Australia
March 2022
technologies and emerging trends in digital marketing have increased the need for more workers with specialised IT
skills, pushing up average wages.
How does your company's profitability compare with that of your competitors? How has this changed over the past
five years?
Average profitability for industry operators is 14.0%.
Industry profitability has increased over the past five years. The rising popularity of online advertising strategies as a
marketing tactic among private and public organisations has primarily driven this profit growth.
External Impacts
Questions
Impact: IT and telecommunications adoption
How does your company track IT and telecommunications adoption levels?
The IT and telecommunications adoption index measures the ability to make use of new and existing technology.
Faster growth in the index is generally associated with stronger adoption of technologies through which digital
advertising agencies can deliver marketing material.
Impact: Business confidence index
How have changes in business confidence affected demand for your services?
Stronger business confidence generally leads to greater expenditure on advertising services.
When business confidence weakens, client businesses can reduce advertising expenditure, hindering industry
growth.
Impact: Demand from internet publishing and broadcasting
How much of a positive effect has increased internet penetration over the past five years had on your business?
The higher the number of internet connections, the greater the potential reach is for the industry's services.
Internal Issues
Questions
Issue: Access to highly skilled workforce
What steps do you take to retain valuable staff?
Digital advertising agencies that can obtain and retain a highly skilled workforce are in a better position to provide
high-quality services and charge premium prices.
Issue: Having a loyal customer base
How do you retain your major clients?
Digital advertising agencies that have loyal customers, based on client satisfaction with previous campaigns and the
results achieved, can grow fee income from repeat work and word-of-mouth recommendations.
Issue: Ability to effectively communicate and negotiate
How do you ensure your staff can effectively communicate with clients?
Industry firms that can effectively communicate the value of their services and recommendations are better able to
attain and build a loyal client base.
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