Credit: Maarten Duineveld via Unsplash
The advertising market, despite distortion by a jump in government spending in the lead to a soon to be announced federal election, is showing signs of optimism.
Guideline SMI data shows government ad spend up 43.6% in January with all major media scoring increases. Linear TV received the largest benefit (+91.1%) followed by radio (+59.7%).
Data for the month of January has media agency bookings back 5% on the same time last year but this is expected to shrink as late data comes in.
Media analyst Steve Allen, at Pearman, points out that January 2024 results released at the same time showed -5.7% but was then finally adjusted to -1.3% after all the late bookings and account query reconciliation.
“We have a federal government spending like there is no tomorrow, which will not continue (no matter who wins) past April,” he told AdNews
"Right now the market is distorted for at least all of quarter one … never-the-less no great gains compared to the same month a year ago.
“That said, we think there is a little room for optimism. Signs are there that marketers are coming round to a revival in brand marketing. More high quality creative strategies and executions are appearing plus better consumer impact media strategy and execution.
“Some good quality consumer effectiveness research coming to market, to support a revival in brand marketing and top-of-funnel marketing…in both efficacy and contribution to brand health and metrics.
“Counterbalancing this is the global outlook. Most likely a trade war, US inspired, and on present indications Australia will be well and truly caught up in this, both directly and indirectly. In the Trump administration, Australia does not seem to be as close an ally to US as we once were. We, like all others, seem to be fair game.
“We remain with our low single digit forecast for media markets growth, around CPI or just above.”
Ashleigh Carter, general manager, Atomic 212° Sydney, said the January SMI results show a cautious, shorter-term market, stimulated by pre-federal election spending which can only increase in February and March when the data comes.
“The growth of ad spending by the streaming platforms, which is supporting linear TV, aligns with our client conversations and increased opportunities in this space,” said Carter.
“We’re seeing significant potential for business growth outcomes across this channel for clients within our group.
“This federal election cycle will be the first with large-scale opportunities to engage SVOD environments and audiences. I expect the current trend to increase as we move into the next reporting period. “
Amy Carr, general manager of growth, Yango, said early indicators suggest a significantly brighter 2025.
“A federal election, coupled with a recent interest rate cut, boosting consumer confidence, creates a favourable environment for advertisers,” Carr said.
“It is not surprising to see streaming services continuing to grow. It is an easy inclusion to a broadcast schedule. SVOD offers clients an opportunity to reach an engaged audience, around quality content. Higher attention and targeting capabilities are winning over advertisers.
“Similarly with streaming audio, we are seeing our clients using a mix of digital and traditional radio. Digital offers more flexibility in targeting and extends the reach of traditional radio.
“We can expect to see traditional channels enjoy moderate growth driven by the upcoming election from both the government and political party communications.”
Alfie Lagos, Director & Founder, Lexlab, said the boom in government ad spend is great if you’re running political campaigns but not useful for the rest of the industry.
“The real question is where the sustainable ad growth is coming from,” said Lagos.
“Right now, the numbers tell two stories. Digital ad spend is down overall, but the premium end of digital is growing, with more investment in streaming TV and digital audio.
“It’s a clear signal that brands are shifting towards quality, trusted environments over the broad reach, spray-and-pray approach. Outdoor is also proving its resilience, delivering slight growth while other channels struggle.
“Meanwhile, brands and businesses are rolling up their sleeves. NAB’s latest SME outlook shows that while costs are rising, businesses aren’t just tightening budgets. “They’re investing in technology, AI, and cybersecurity to future-proof themselves. That’s where the real energy is right now. It’s not just about where ads are placed but how businesses are actively adapting to the market.
“The election might be driving a short term spike in government ad dollars. But for long-term advertisers, the real play is trust, innovation, and efficiency.”
Ros Allison, Head of Product & Innovation, MAGNA, said the January SMI numbers show a brighter start for 2025 and the totals are likely to close up with late digital and programmatic OOH revenue.
“Green shoots for the linear TV market, with metro revenue down only 2%, and some marginal growth on key trading audiences,” said Allison.
“Nine bringing in their highest ever SMI revenue share for January at 55%, showing the power of sport for Australian TV. With a power ratio of 132, high yields for AO (Australian Open) and reach premiums evident. Expecting a further correction for TV spend, particularly through the election, after consecutive periods of revenue declining faster than audience.
“Confidence grows for OOH, with programmatic OOH, expect agency growth at +5%, and some resurgence for oOh!. Still room for growth in Street Furniture as the CBD return to office continues.
“Agency spends in digital reflect only a fraction of the total market. We’re expecting 10% total market growth in 2025 with agency growth curve below total market given relative maturity.”
Amy Dasciano – Managing Director, Enigma Media, said the SMI numbers should be seen as a solid outcome for the ad market and shouldn’t be taken as an indication of the year ahead.
“Heading into 2025 there was still a general expectation that the market would remain tight, with clients continuing to exercise caution,” said Dasciano.
“This sentiment has been further impacted by the upcoming Federal Election in April/May and ongoing concerns about economic pressures across the industry.
“On a more positive note, particularly for the TV networks, the ad market is now trading with a longer-term outlook compared to the short-term trading we experienced in 2024. This shift has been driven by increased government spending across Q1, providing a welcome boost to the market. “However, while this is encouraging, it also means that some sectors are holding back their investments to avoid the clutter, instead planning to reallocate budgets towards late Q2.
“The latest January results continue to reinforce the growing integration of digital into traditional advertising channels—a trend that continues to reform market dynamics and provide opportunities for channel growth. A strong example of this is outdoor, which has continued its solid performance, reflecting its investment in digitalisation and programmatic trading.
“There are signs of positivity in the market, and we are currently having more forward-thinking discussions with our clients, with planning cycles focused on Q2 and beyond, which for us is an encouraging sign for the year ahead.
Brodie Carr, account director, Claxon, said a positive outlook is supported by a surge in government sector spending and the anticipated increase in election-related expenditure over the coming months, especially with the voting date frequently discussed in the media.
“Out-of-home advertising is poised to be a major beneficiary, with electorate-focused campaigns already being booked in with many ready to secure their spots once the date is called,” said Carr.
“Agencies meanwhile, will need to ensure their clients' advertising spends stand out amidst the flood of federal election ads. Shifting some of that spend to digital media, can engage directly with consumers, will be key to maintaining visibility.”
Lee Stephens, executive chair, Meerkat Media, said the reality is that the market was held afloat by the dramatic increase in election related spending.
"If it wasn’t for election spending, the results for TV and radio would have been dire at best," he said.
"OOH is the only media that has experienced real growth, albeit small. The real concern here is that declining retail media investment is driving otherwise strong growth to a crawl. But still, a win is a win in a very tough market.
"The New Zealand figures show a potential light at the end of the tunnel for Australia. The NZ Central Bank started cutting the official cash rate in August 2024 and delivered a 4th cut in February. Media growth rates are off the charts in an otherwise cautious market, buoyed by booming consumer sentiment."
Georga Payne, chief investment officer, Woolworths Group@dentsu, said the latest data continues to show FLAT agency spend, with biggest growth unsurprisingly from government.
"Growth in ad ad spend for some OOH owners is mostly influenced by acquisitions especially in retail and new formats like office delivering strong results for oOh," said Payne.
"What was old is new again with renewed demand for transit, growth for JCD +17% Jan YoY, +32% FYTD. Generally, ‘classic’ formats appear to be making a comeback with clients looking for high impact but cost-effective OOH. Not only do January numbers show this but longer-term bookings, as seen by oOh.
"We see sport continue to be a premium asset across Screens with new Cricket streaming rights attracting new audiences and attributing to 7Plus growth of +107% YOY. Expect AFL rights to deliver similarly strong demand. Ten’s decision to move ‘I’m a Celeb’ forward a positive move in stabilising Ten revenue.
"Finally in audio we are seeing growth in digital audio across traditionally linear radio networks impacting Spotify growth, still up but moderating to single digits."
Nicola Barnes, iProspect head of investment, said this rise in digital from government spending, whilst being earlier than expected, is likely to continue, especially as the election marks the first time Gen Z and Millennials outnumber Baby Boomers at the ballot box.
"We've been advising our clients about the importance of longer lead times to secure premium inventory, and now as advertisers are ensuring they capture the digital counterparts of offline media, particularly through streaming services and digital platforms, we should be forward planning in these environments too.
"Without the influence of government spending, the ad market would be experiencing a 10% year-over-year decline. In my view, the most surprising trend has been the drop in digital spend, especially after over two years of consistent growth.
"Video is the only digital category showing positive growth, which I believe signals a shift toward high-impact, engaging content and a focus on screen strategies due to the increase and fragmentation in supply.
"Brands now have expanding opportunities to accelerate their growth and performance by utilizing emerging technologies such as AI, automation, and digitalization, which can all help achieve their desired outcomes.
"While government spending is masking a broader market decline, there are still positive signs, such as transit driving out-of-home growth and magazines, despite a small base, are seeing double-digit growth. With interest rates decreasing, advertisers might have reasons to feel optimistic. However, with the election likely taking place in April, and as political parties intensify their campaigns, we could still see advertisers exercise caution around their campaign timing and spend."
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