Total media market
Many years ago, there was a phrase often used by a well-known figure in the radio industry that went, ‘Research figures are just a bunch of numbers looking for an argument’. Compiling our forecasts for Outlook 2019 reminds us of this quote.
In 2019, we still rely on conjecture to estimate the value of the media market in the Republic of Ireland and Northern Ireland. This approach results in very different figures being quoted across the market. This needs to stop; we must agree an industry-wide approach that reports real, approved numbers.
To facilitate this, Core has invited the industry’s representative body (IAPI) to establish a committee, with representation from all stakeholders, to manage this project. We are not suggesting that the advertising revenue of each individual media owner be published – that is unnecessary; but what is necessary is an accurate breakdown of total spend by medium.
An independent third party (i.e., an accountancy firm) could facilitate this, while protecting the confidentiality of company-level information. A similar process is already in place for TV (managed by TAM Ireland) which employs a third party to establish an accurate commercial revenue number for TV (as a whole) from individual spends supplied by each broadcaster.
In 2018, we restated our digital media estimates based on a deep dive in the sector. In 2019, we are doing the same for out-of-home (OOH) as previous estimates understated the value of the ‘direct market’. We also reviewed how video advertising is classified to include video that runs in social media channels.
All the figures quoted in our market commentary are gross (including agency commission). This is consistent with international practice and globally quoted figures for other markets. Please also note that the spend levels quoted are for the total advertising market (agency and direct combined).
A hard Brexit is not factored into the predictions for Outlook 2019. However, in the unlikely event that the UK does crash out of Europe, the impact on marketing budgets will be significant.
Commentary from the UK suggests that a hard Brexit could result in a 5% decline in advertising investment there.
The Republic of Ireland market is even more exposed: approximately 25% of advertising spend here is allocated from the UK in sterling; economists believe that a hard Brexit will result in sterling falling in value by a further 10%, which (when combined with weaker sentiment in the Republic) could see investment levels contract by as much as 9% here.
In the case of Northern Ireland, a hard Brexit would result in a smaller decline, of circa 4%, due to anticipated increases in government spending on information campaigns specific to that region. Government spend remains a significant category in Northern Ireland. Offline media would bear the brunt of the declines in each market.
Total Media Market
GDP growth in the Republic of Ireland last year was a robust 6.8%1, but this did not translate into a buoyant media market. We estimate that advertising investment grew by just 2.2%, valuing the market at just over €1 billion.
Brexit uncertainty was a significant factor in this subdued growth level.
Concerns regarding a hard Brexit intensified as we entered 2019. This is reflected in a poor, but not unexpected, start to Q1. The likely extension to Article 50 will see continued uncertainty.
Therefore, we forecast that advertising investment in the Republic of Ireland will grow by just 0.6% in 2019 to €1.044 billion. As with previous years, online will deliver the growth in the market, albeit at a slower rate than before. We expect offline media to see a third consecutive year of decline, with overall spend falling 4.5% to €525 million. Short-termism will remain a defining feature of the market, adding to uncertainty.
The Northern Ireland market saw a slight increase in spend last year. We estimate that overall investment increased by 2.5% to £184.9 million (€210m) in 2018.
In 2019, we anticipate that growth in Northern Ireland will be lower than the rest of the UK, driven by a weak economic outlook. We forecast that spend will increase by 1% to £186.7 million (€212.1m).
1. European Commission (2019)