Does free-to-air television really need gambling ads to survive?

If anything is now certain, it is the willingness of corporate Australia to utilize some version of the “for the good of society” argument.

The latest example of this is the claim made by, among others, the federal minister Shorten Billthat a total ban on gambling advertising would have disastrous consequences for public television.

To be clear, Labour continues to support recent restrictions on gambling advertising, including hourly limits and bans on gambling advertising in children’s programmes and during and around sports broadcasts.

However, he rejected the idea of ​​a complete ban, which caused reaction even reaching out to some members of parliament from the rank and file.

Speaking on ABC’s Q&A show on Monday night, Shorten said Australia’s free-to-air broadcasters were in “diabolical trouble” and many needed advertising revenue “to stay afloat”.

“I’m not convinced a total ban would work,” he said.

Will our commercial TV networks really go bankrupt tomorrow without gambling ad revenue? Or is something else at play?

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Read more: Government under pressure to ban gambling ads, but history shows half-measures don’t work

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Who buys advertising in Australia?

Let’s start by building a broader picture of where Australia’s ad spend is coming from. Global analytics firm Nielsen regularly collects Top 20 lists of categories and individual companies that spend the most on advertising.

In 2023, the top category, retail, accounted for $2.56 billion of Australian advertising spend. Gaming and gambling, on the other hand, accounted for just $239 million, less than a tenth of that.

Harvey Norman topped the list individual companies in 2023. The first gambling brand we see is Sportsbet, which is ranked 16th.

In the case of gambling companies, it is unthreatening to assume that the lion’s share of profits goes to television. Tests The Australian Communications and Media Authority (ACMA) found that 68% of gambling advertising spend goes to free-to-air television.

The remaining 9% went to radio, 15% to social media and 8% to other online platforms.

How much does it really cost?

But how do you estimate the gaming industry’s total annual advertising spend? There are certainly a lot of numbers being thrown around.

One source It is estimated that in 2022 it will amount to USD 300.5 million.

ACMA recently published detailed data for the period from May 2022 to April 2023, which indicates just over $238 millionof which $162 million will go to public television networks.

But how an ad is classified – what defines it – can sometimes differ between agencies. Then there’s number of operating brandswhich is constantly changing.

In a market where there are so many competitors, each recent entrant has to invest a lot of money in advertising to gain enough market share and stay in business.

I therefore argue that the actual amount for tax year 2023 may be slightly higher than the widely reported ACMA amount, due to enormous advertising expenditures by recent entrants that may have fallen outside the assessed time frame.

Considering the average corporate advertising spend as a percentage of revenue and the size of the gambling industry, I estimate the figure could be higher and around $275 million.

How much does it cost the network?

This exercise aims to place these numbers in context.

For example, Channel Seven introduced $1.5 billion in revenue in 2023Even if it received the entire advertising budget of the gambling industry, by my higher estimate of $275 million, it would still represent less than 20% of its annual turnover.

If all of this money were spent on TV advertising, Channel Seven’s claimed share of TV ad revenue of 38.5% would mean that its sports betting ad revenue in this example would be around $106 million, or around 7% of its total annual revenue.

Losing most of them would be painful, but it would not pose a mortal threat to the company.

A total ban would most likely be introduced in stages over many years and were not introduced overnight.

Australian free-to-air networks would adapt, re-strategize, find and develop recent markets to replace these revenues. Their management teams are too shrewd to simply shrug and take a hit to their corporate beard revenues.

Networks have had plenty of time to adapt

Just a reminder. LinkedIn is now over 20 years senior. Facebook is 20. YouTube is 19. X (formerly known as Twitter) is 18. TikTok is seven.

If a free-to-air television business model is so flawed that it can’t function in the digital age, then it probably doesn’t deserve to play in the top league.

Digital is here and has been for some time. The media industry has borne the brunt of this change, but it has also had the longest time to adapt to disruptors that are now more entrenched oligopolies and duopolies than “cold start-ups” from Silicon Valley.

The argument that we need to protect sports betting ads in order to protect large media brands has little to no basis. It’s a well-worn argument that we’ve seen time and time again – large tobacco, I’m looking at you.

Protecting the interests of corporate Australia at the expense of society itself is a risk none of us should be prepared to take.