Credit: Valery Sysoev via Unsplash
Strip out the frenzied government and political noise, with cash now flowing into TV networks, and the advertising market is tracking to its more recent volatility.
Guideline SMI’s ad spend data shows ad demand back 0.5% in February. But that’s with revenue from the government category up 46% and more to come from political parties in March, April and May.
In February, outdoor lifted 9.2%, radio demand was 3.4% high and print newspapers rose 2.4%. Cinema delivered the highest percentage gain of almost 21%.
With the election now announced for May 3, government spend has dried up and the political parties are swamping the market..
“The advertising market in Australia right now? It’s in full-blown election mode,” said Ben Willee, executive director of media and data at Spinach
“Government ad spend is up 48% in January and February alone. Good news for media owners, not so good news for consumers. It feels louder than a lawnmower in a library.
“Open your phone, turn on the TV, glance at a billboard and BAM! – another political advertisement. It’s less a media strategy and more a saturation bombing campaign.
“Consumers are moving quickly from being persuaded to just plain annoyed.
"By May 3, voters won’t just be tired of the politicians… they’ll be ready to vote for whoever promises to turn off the ads."
Shai Luft, co-founder and COO, Bench Media, said February’s advertising market paints a deceptive picture of stability, concealing deeper volatility.
“A modest 0.5% decline seems manageable, until you factor in a 46% surge in government spending, a pre-election sugar hit that injected an extra $12 million into the system,” Luft said.
Remove the political boost, and the reality is a 2.7% market drop.
“Outdoor media shines with an 8.7% gain, likely fueled by DOOH, while cinema has surged over 20%, but these are rare bright spots in an otherwise challenging landscape,” said Luft.
“Automotive’s 10% slump underscores weakening consumer confidence, but the real concern is the sharp drop in ‘other’ media, including digital investment, highlighting broader advertiser hesitation.
“With government spending set to taper off post-election, brands should see this as an opportunity.
“Rather than retreating with the pack, now is the time to go on the offensive, capitalising on reduced advertising competition to gain market share. Brands who invest strategically in a downturn will be the ones leading the recovery.”
Analyst Steve Allen, at Pearman Media, said the SMI numbers are heartening but they are presently artificially held up by a wall of government spending (+44% January, +46% February).
“However the Media really needed this and the highlights are Newspapers (finally significantly slowing their pretty persistent double digit monthly declines) and Television (now down to low single digit declines),” he said.
“Unquestionably media markets are trending in the right direction.
“However, this week’s ABS retail numbers (nil growth February and only +2.12% over first two months this year), remind us of what Morgan Research shows; we are not out of the woods and there is no apparent magic bullet solution.
“Much more of the same tough conditions to come.
“Advertising is the way to unlock consumer spending. The brave and bold will succeed.”
Lee Stephens, executive chair, Meerkat, said a bellwether of real market performance has always been the auto category, which is “performing terribly” given the many new entrants to the market.
“Given we finally have the election announcement, media spend overall will inevitably boom, however the benefits will be enjoyed by a few channels and agencies, not the market overall,” he said.
In New Zealand, ad demand was up 4.2% in February,,the fourth month in a row of advertising growth.
“New Zealand’s incredible media investment growth has been driven by no less than 4 interest rate cuts,” said Stephens.
“Australia has some months to experience such comparative media performance, driven entirely by consumer sentiment.”
Amy Carr, general manager of growth, Yango, said political parties are now aggressively ramping up March and April budgets, especially for TV, with an extra $14 million pouring into the TV networks.
“This surge is boosting overall ad demand,” Carr said.
“We are already seeing advertisers who have traditionally booked premium inventory short-term, not having the same success.
“February's results present a mixed picture. While the overall market dipped by 0.5% year-on-year, stripping out the government spending reveals a 2.7% decline.
“Outdoor continues its impressive growth trajectory, up 9.2% (or 8.7% excluding the government boost), a channel now favoured by many of our clients to drive upper funnel awareness.
“We are starting to see the benefits of talent switch ups in radio with an increase of 3.4%. Cinema surged by a massive 20.8%. I’d suggest that we will see these channels continue this trend into April, driven by government spending and advertisers looking for less cluttered environments to leverage across the election period.”
“The question on my mind is whether the automotive sector (currently back 10%) will rebound for the crucial EOFY retail period, particularly with the influx of new Chinese brands arriving in market, heating up the competition.”
Ros Allison, head of product & innovation at MAGNA, said that, once final billings are in, she expects the year to have started up 3% on 2024.
"Evidence of last year’s tough conditions easing – the 2024 soft media market anchored to the cost of goods - with inflation, low confidence and a weak dollar creating a cost out environment. Now we're seeing cyclical government spends, growth for insurance and stability for retail fuelling year to date growth.
"There’s limited political party spend in the Feb SMI data. While some spends won’t be reported via SMI, Australian political spend is not the boon of some other global markets, compared say to the cashed up party system in the US.
"Year to date there’s a natural correction back to free-to-air linear TV after a year of revenue falling faster than audiences, and including BVOD, the networks have had a strong start to 2025. Out of home category expected + 15% in February including Programmatic OOH spends, with strong spends for large format and return to office helping street furniture approach pre COVID levels. And the election even creating some respite for newspapers."
Adrian Roeling, chief operating officer at Hatched, said: “At least Clive Palmer has one redeeming feature…he helps prop up our local advertising market every three years!
“Consumer confidence and in turn the advertising market is still in a conservative state, and we’ve yet to witness any real improvements in either post interest-rate cuts.
“As we witnessed in the US, post-election could prove the perfect time for advertisers to capitalise on a perfect combination of a potential bounce in consumer confidence and a soft advertising market – an ideal environment to generate strong short-term return on investment.”
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