Advertising spend, as measured by media agency bookings, is holding up “remarkably well” but much depends on the direction of the economy and how well off consumers feel.
Multiple reports show a good Black Friday spend fest by consumers but some say may not translate into high spending going into Christmas.
Industry insiders point to the October SMI (Standard Media Index) numbers showing an overall fall of 3.2%.
However, 2023 compared to last year is still tracking for the second largest year on SMI records.
Ken Lam, iProspect’s national head of investment, points to the latest CommBank iQ report highlighting that cost-of-living pressures are having a bigger impact on under 40s and discretionary spendings.
“So we may see a drastic slowdown in ad spend in the new year and a shorter term market in Q1 (March quarter) which will further benefit digital channels and activations,” says Lam.
“Advertisers in many categories like Retail, Entertainment, Consumer Goods, may look to be more cautious and reactive to economic conditions by holding back spend.”
But it’s been a positive story for out-of-home with spend up 16.8% which has been fuelled by a combination of returning ad spend across all formats including transit, airports, along with continuing growth in digital, programmatic and dynamic opportunities across more OOH inventory.
“Growth in the channel should remain steady in Q4 as we head into peak OOH season over the summer period, despite another potential rate rise on the way,” says Lam.
“And similarly for Digital Video and Audio players which continue to see mid-single digit growth, partly offsetting spend declines in traditional TV and Radio, which speaks to the shift in audience consumption as well as advertisers capitalising on advancing tech capabilities to run both brand into performance tactics within these channels.”
Media industry analyst Steve Allen, Pearman's director of strategy and research, says the latest SMI numbers show an improving trend.
After month end adjustments to prior month/s, September is +0.3%, a 3.5 % turnaround on prior month end, only the second growth month for the year-to-date.
"And after late bookings and adjustments October most likely will be just in growth, says Allen.
“A very good month for Outdoor, but not very positive for other major media sectors,” says Allen.
“However, a little joy for minor media (in the scheme of overall media turnover) Consumer Magazines (paid cover price) and Cinema.
“Television really struggling and not seemingly supporting what was offered as market commentary in AGM presentations.
“Newspapers continuing to be the worst in trending of the sectors.
“Unlike the patterns over the past couple of decades, Radio also struggling to beat last years turnover, however by no means all bookings coming through Media Agencies and thus captured by SMI figures.
“All of this works to our original forecast for the year of -2.95%.”
Nick Murdoch, managing partner at Yango, says the bounce back year of 2022 has been skewing the year on year comparisons.
“2022 was an extraordinary year with the COVID bounce back and pent up demand skewing that year's results, so when you look at this year's results on their own merits and not against 2022, spend has held up remarkably well.
"There are winners and losers though, and I believe because some of the louder segments of the media industry have been crying poor, it makes it feel like it’s been worse than the numbers suggest.
“Legacy businesses like those exposed to TV revenue are suffering, and so are some of the group media agencies. In some cases this is structural change and not just a slow ad market.
“It's always easier to go for the slow market response than to say we are down because our business model is going through permanent structural change and may never be the same again - surprisingly shareholders don’t like to hear that!
"It's another great result for the outdoor channel; it is Increasingly the go-to broadcast medium for cost sensitive media buyers looking for mass awareness. The channel is innovating and making itself easier to buy, so not surprisingly they are continuing to go from strength to strength. Our clients are buying more and have plans to do the same next year."
Daniela Rocchi, head of partnerships, Sydney, Initiative, says the October data unveils a robust and revitalising advertising industry in Australia.
“SMI figures confirm that ad expenditure from January to October ranks as the second largest in SMI history,” she says.
“This data provides agencies and clients with valuable insights to refine their strategies, allocate budgets wisely, and capitalise on emerging opportunities within specific media channels.”
She says the outdoor media sector has showcased remarkable resilience, signalling a significant recovery from the challenges posed by the COVID-19 pandemic.
“The October data for the Standard Media Index (SMI) reveals that outdoor media has not only surpassed its pre-COVID levels but has also achieved a record high, with October bookings experiencing an impressive 19.3% year-on-year growth. This remarkable rebound comes at an overall market increase of 3.2%.
“Apart from outdoor media, cinema advertising reported a notable increase of 12.6% year-on-year. However, digital ad spends witnessed a slight decline, down 2.4%, with a 1.3% decrease overall when traditional media-related revenues were factored in. Linear radio ad spends remained flat but showed growth when digital audio ad spend was included in the analysis.
“The October 2023 data from the Australian advertising market, particularly the positive trends in outdoor media and cinema advertising, holds several implications for the advertising industry, agencies, and clients:
“Industry Recovery: The significant rebound in outdoor media and cinema advertising indicates an overall recovery of the advertising industry in Australia. After facing challenges during the COVID-19 pandemic, the positive year-on-year growth suggests renewed confidence and investment in advertising.
“Media Channel Effectiveness: The data highlights the effectiveness of outdoor media and cinema advertising in capturing audience attention and driving engagement. This insight can guide advertising agencies and clients in making strategic decisions about allocating budgets and choosing media channels that deliver strong returns on investment.
“Digital Advertising Dynamics: While overall digital ad spends showed a slight decline, it's important to note that this figure includes traditional media-related revenues. The specific dynamics of digital advertising, including the growth in digital audio ad spend, indicate the ongoing importance of digital channels in the advertising landscape. Agencies and clients should continue to adapt and invest in digital strategies.
“Opportunities for Creativity: The recovery in advertising expenditure provides an opportunity for agencies to be more creative and innovative in their campaigns. Clients may be more willing to invest in compelling and unique advertising concepts that stand out in a competitive market.”
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