The Australian advertising market is showing resilience in the face of economic uncertainty.
Advertising spend, as measured by media agency bookings, continues to record a fall each month when compared to a strong 2022.
Bookings dropped 3.8% in September compared to a record in 2022 when the market topped $800 million a month for the first time.
But this was still the second largest in SMI's 16 years of data history the market is 0.6% larger than in the pre-COVID September 2019
Ben Shepherd, dentsu’s chief investment officer, sees an end to falls in ad spend as the index comes up against the close of the year and starts being compared to contractions at the end of 2022.
“The movements driving declines and growth are numerous and appear unrelated,” he says.
“We are seeing out-of-home maintaining growth, but the overwhelming majority of this growth is being driven by big year on year gains on large format.
“For out of home the outlook on other formats is flat. The spend gains in out-of-home are being fuelled by four to five categories.
“On the other side metro TV continues to decline, but a close look at the drivers of this demonstrates it’s a handful of categories that are creating the lag here, for the majority of these categories (excluding gambling) it’s reasonable to expect they will bounce back to at least 2022 levels either when both cost-of-living impacts and share market lethargy retreat.”
Ben Willee, media director and general manager at Spinach, says the video sites/streaming TV market growth is a significant increase and will continue to grow at a rate of knots.
“Advertisers can achieve strong results with sight, sound and motion and there is a lot of inventory in that space,” he says.
“The rest of the market is a reasonable outcome given the pressures on consumer confidence. Whilst business confidence is resilient, we expect a resilient advertising market.
“There are a lot of consumers who are holding on like a squirrel in a windstorm and all eyes are now on the RBA’s Interest rate decision on Tuesday.”
Media analyst Steve Allen, Pearman's director of strategy and research, says September was a relatively small dip, consistent with the pattern all year, with July the exception.
“Within this, those improving were the mediums the referendum sought out; TV, radio and to a lesser extent payTV and outdoor,” he says.
“The present indicators on inflation, and thus the RBA’s interest rate movement next week, does not bode well for the overall economy, and the run to Christmas.
“Yet retail sales remain stubbornly strong, inflation pushing or assisting this.
“Whilst outdoor is the strongest performer YTD, it is cinema which (though small in the overall scheme) is outperforming, since the two blockbusters of July, Barbie and
Oppenheimer hit the screens, and kick started the recovery of Cinema attendance, pretty much all weeks since then above $10 million box office.
“We believe the overall ad media market will remain subdued, especially since Morgan Research forecast (for Australian Retailers Association) does not spell consumer intention to spend big at Christmas. With Interest rate rises, inflation, and the rising high cost of fuel, hardly surprising.”
Gaby Srour, media director at Avenue C, says the ad market has demonstrated impressive resilience, with only a 2.5% yeat-to-date decrease in spend.
And this despite a 7-point reduction in consumer confidence compared to October last year (78 vs 84 index).
“With Google searches for ‘Black Friday sales’ doubling YTD, we can expect the YOY ad spend gap to narrow in November with advertisers poised to take advantage of the heightened interest in the Black Friday/Cyber Monday sales event,” says Srour.
“While it's widely acknowledged that ‘linear first’ networks have experienced a YOY ad spending decrease of 13% YTD, Foxtel's strategic emphasis on their digital offerings has paid dividends.
“The network is currently bucking the trend with an increase in total ad spend despite its linear offering back YOY.”
Nick Murdoch, Managing Partner, Yango, says the market has surprised many with its resilience in the face of uncertainty.
“That September is the second biggest month ever recorded by SMI, shows that opportunity still exists. It’s been a turbulent year, but the industry is hanging in there.
“The ongoing bounce back of outdoor is great to see,” he says.
“Our clients see it as a reliable option in an increasingly fragmented and complex ecosystem; if something is simple and effective, that’s a great combination. It compliments screen-based strategies so well I’d expect the growth to continue.”
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