The reporting season has already shown the difficulties facing many media companies. Seven West Media groups results were disappointing and reflected the softness of the television market. Seven West’s shares fell 14 percent to 24 cents, its lowest level since November 2020, with its capitalisation at $360 million compared to $740 million this time last year. The station feels that the market is poised for a rebound, but the current state of competition would suggest 2024 will continue to be a difficult year for television generally.
Think TV, the commercial TV sector’s marketing body, believe the market fell 10.4% to $3.39 billion in the 2023. Many media analysts point to the rebound after the global financial crisis where TV expenditure fell 8% in 2009 but rebounded by 16% the year after. Perhaps the key difference is the competitive nature of the market with Meta’s Facebook and Instagram reporting record revenue in the last quarter of 2023.
The overall advertising market, according to Guideline SMI fell 2.7% in 2023.
More Australians are using Meta’s family of apps-Facebook, Instagram, WhatsApp, and Messenger than ever before. Meta, MD Will Easton recently stated that its video products were booming despite the threat from fast-growing competitor TikTok. Short-term content is growing quickly across both Instagram and Facebook. Meta is also planning to capitalise on the rapidly growing influencer economy with the rolling out of the ‘Creator Marketplace’ to Instagram in Australia. This will allow anyone to contact and hire influencers for advertising. Meta’s artificial intelligence platform, meta-AI, will also arrive locally this year.
Global sales for the last quarter for Meta were $US40.1 billion with a profit of $US14 billion. Based on one estimate from the ACCC, Meta raises $5 billion from local businesses every year. It reported $US36.2 billion in revenue in 2023 from customers in the Asia-Pacific region with $26.5 billion being generated from Ad revenue.
Will Easton has publicly stated that brands spend too much on TV advertising and Google Search. Global firm Analytic Partners is yet to release research which is believed to show that social media is perhaps 30% underrepresented in most advertising plans.
The competitive dynamic has never been more intense, and it seems the market conditions are very different to the last time we saw a big dip in TV revenues with Meta now really flexing its muscles. 2024 will be a watershed year to see whether TV can respond to the changing market and hold its share of client advertising budgets.
For agencies and clients one thing is certain, the ability to buy well and take advantage of the competitive marketplace has never been more important.