With Christmas around the corner, AdNews asks C-Suite executives from Zenith, Carat, MediaCom, David Jones, Kmart and eBay to weigh in on media spend and activity.
Christmas campaigns are starting earlier as retailers bank on December quarter gains, offset by declines in other sectors.
Australian media investment jumped 6.6% to $774.9 million in September according to SMI numbers, with forward pacings data indicating strong bookings in October. The retail category recorded the fastest growth at 12.7% yoy, coupled with the return of auto and travel advertising.
Zenith Media chief investment officer Elizabeth Baker said the shift to earlier Christmas campaigns would be a strategic advantage for retailers in Q4. This morning, David Jones announced it would instigate an early birds campaign four days ahead of Black Friday, via its own 'Event Of The Year' on November 21.
“The importance of exploiting these sales periods is more relevant than ever in the current climate as consumers will take advantage of the big sales days to save money – essentially bringing forward the Christmas shopping season to avoid increasing inflation,” Baker said.
The annual inflation rate in Australian in Q3 was the highest since Q2 1990. To this end, Baker also noted a shift in media spend to contextual tactical price messaging, particularly across retail and grocery. A recent ALDI Price Report was featured at the pump with the tagline ‘Petrol prices are rising but you can still save $2400 a year at ALDI.’
“As consumers and brands continue to cope with the financial pressures associated with inflation, we are seeing it is now more important than ever to build value-based relationships,” Baker said. “Interest rate rises and the inflationary impact on the cost of living will no doubt impact consumer confidence in the lead up to Christmas and there is growing nervousness with some retailers about ROI for their Christmas media investment this year.”
Across Publicis, retail, auto, domestic banks and travel media spend were up in Q4 offset by declines in other sectors. There are early indications of global companies starting to pull back budgets, with FMCG spend easing yoy in the last quarter.
“This is impacting the Sydney market the most pre-Christmas with a lot of global brands headquartered out of Sydney, but other states not feeling the pinch as much yet, as locally based clients spending is relatively flat to up single digits yoy,” Baker said.
Carat chief investment officer Craig Cooper confirmed media budgets were being impacted in some categories. Q4 is traditionally the busiest period in the advertising calendar, not just the securing of key pre-Christmas campaigns but also planning and negotiating the next 12 months. Cooper noted a repeat in “huge demand” for linear television this quarter in line with clients prioritising earlier bookings, while outdoor retail environments have been consistent with their Q4 rate premiums over the past decade.
“At the year end, we should see YOY increase in spend across most channels, but there have been some categories that have been more cautious than others,” he said. “Given local and global economic pressures, there is some nervousness as to how Australia will fare in 2023 and this has led to some campaigns either being held back or approved with much shorter lead times to stimulate short term outcomes.
“We are very much in an inflationary media market and most likely have another 12 months of navigating and mitigating this for clients. As we have seen significant pressure on consumers with interest rates and ultimately cost of living, the inflation in most channels is impacting media cost delivery.”
Mediacom director of eCommerce Karleitia Bodlovic said earlier Christmas activity, spurred by Black Friday and Cyber Weekend, held Q4 retail spend despite rising ad costs.
“Now there’s a significant opportunity to drive additional revenue and sell through product earlier in Q4. In terms of media planning, it’s adding to most retailers’ already full marketing strategies and to the consumer it’s another week on sale. Media spends are growing [but] so too are the associated advertising costs.”
Mid-year forecasts showed globally a steady increase towards 8% growth in media spend for the year. Despite economic turbulence across all markets, including multiple rate rises in Australia, Bodlovic anticipated the target would be met with minor planning adjustments at Christmas.
“Reserve Bank governor Phillip Lowe indicated rates will likely go even higher into 2023 This is likely to impact consumer spending over the next six months, therefore, brands will need to think beyond their current strategies and prepare for changes in consumer behaviour while the RBA looks to reduce inflation,” she said.
“We will likely see small, immediate changes during Christmas this year, however if the past three years has proven anything for brands it’s the need to be prepared for anything and agile for change.”
Discount department store Kmart will head into the trading period after its most significant ATL investment for several years in H2. Kmart GM marketing Rennie Freer said pre-Christmas campaigns had already impacted Q4 activity with extended trading hours starting from mid-November.
The retailer operates an integrating marketing campaign across TV, Youtube, large format OOH, catalogues, radio, social media, digital display, PR and instore VM.
“We have noticed customer traffic has already increased from previous years and customer expectations on delivery, product ranges and prices have also been steadily increasing," Freer said. "A focus on digital experience and fulfillment technology, while providing value at every touchpoint, will be critical to ensure we meet customer expectations across the Christmas season including Black Friday.”.
David Jones has also scheduled one-day offers on Black Friday, in addition to its earlier ‘Event of The Year’ activation. David Jones CMO James Holloman said events such as Cyber Weekend attracted a different demographic to the department store.
"We are seeing an increasing number of customers embrace Cyber Weekend offers to purchase their Christmas gifts early. Cyber Weekend brings David Jones new and very different customers, and this gives us the opportunity to show them our full range of products and services.”
In addition to its fully-integrated ‘A World Of Wonder’ Christmas campaign, Holloman said digital and social platforms would be key for the season alongside its 164-page Gift Guide.
"Christmas is a key period for us and one where we can really connect with our customers. While we can’t disclose figures, it’s a time we invest heavily in to ensure our customers have the best experience, and we expect the next few months to be especially busy with great anticipation for the season ahead."
According to forecasts from Roy Morgan and the Australian Retailers Association, sales are anticipated to reach a record $6.2 billion over the four-day Black Friday/Cyber Monday weekend (Friday 25 November to Monday 28 November 2022). This would result in a substantial increase of $200 million on 2021.
eBay Australia’s Sophie Onikul said toy affordability will inform two-thirds of Australian parents' purchases this year. The online marketplace conducted its own third-party research into Christmas, with cost of living pressures and RBA rate rises top of mind.
“With Aussies tightening their belts due to increased cost of living pressures, we expect people will be looking to get the most bang for their buck by shopping Black Friday deals to save money and spread out the total cost of Christmas,” Onikul said.
“We’ve seen the Christmas shopping season stretch in recent years. No longer is it just the first week or two of December - it now begins in November with Australian retailers and consumers taking advantage of Black Friday sales and more Aussies shopping online for Christmas.”
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