IAB-PwC value ad-funded services at $94bn as lawmakers mull data-privacy overhaul

News 23 Nov 2022 - 2 min read

IAB-PwC value ad-funded services at $94bn as lawmakers mull data-privacy overhaul

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Ad-funded services contribute $94bn to Australia’s GDP per calculations by IAB Australia and PwC. The report comes as regulators and lawmakers work out how far to tighten restrictions on use of personal data and overhaul the digital ad industry.

Ad-funded services add $94bn Australia’s GDP per a report from digital ad industry peak body the IAB and PwC.

The report comes as Treasury mulls the latest round of recommendations from the ACCC on digital platforms and services and as lawmakers consider how far to rein-in use of personal data.

Running the numbers on the total value of services to Australians that are paid for by advertising, PwC estimates some $55.5bn in direct consumer benefits.

It attributes $36.5bn to lower transaction costs, including the value of time spent. PwC estimates that ad-funded services save people on average 25 minutes for goods and services bought (equating to $15.9bn) and increased competition between providers, i.e. having free search and websites via which to compare prices, which PwC valued at $14.7bn. Access to educational services, at $5.9bn made up the rest of that tranche.

The report values free access to ad-supported content such as news, entertainment, social media, email etc. at $8.8bn. It suggests “having consumption more closely matched to preferences”, is worth $10.2bn in direct consumer benefit.

Meanwhile, the upshot of digital advertising – prompting people to buy things – is calculated as worth $54 billion for individuals and $29 billion via business spend in 2021-22 per the report, which suggests an average return of $6.4 for every digital ad dollar spent based on a $13bn digital ad market.

After laying out digital advertising’s economic value, the report flags data regulation as an incoming challenge and calls for government to take a balanced approach to privacy overhauls – or risk disrupting free services and crimping that $94bn GDP contribution.

“The challenge for lawmakers will be setting the right regulatory parameters to ensure individuals’ privacy is protected and also ensure the smooth functioning and development of all online interactions and activities – for individuals, business and the economy,” per the report.

“Delivering this balancing exercise appropriately is no simple task and requires a framework that is flexible and adaptable.”