With bad news so much more interesting than good we’re often guilty as an industry of talking the market down, as much as I like to avoid that it’s hard to see too many green shoots in the near term, the lack of discretionary spend above set budgets has stymied growth for everyone in 2023 and that trend is set to continue into 2024.
The most recent IMF forecast for Australia in 2024 is to crawl forward with only 1% growth, stacked up against RBA data showing consumers are 5% worse off in real terms than before COVID, plus an environment of higher interest rates it all paints a picture that shows discretionary spend is going to be tough to find for clients and the wider media market throughout 2024.
Ongoing global shocks, mortgage cliffs and supply chain challenges while all familiar to everyone aren’t going anywhere soon, as this combination leads to a slower decline in the headline inflation rate than hoped, whilst simultaneously depressing consumers ability to spend there are some clear implications across categories, especially for those that occupy the middle ground...It’s going to be important for brands to ensure that they’re not stuck in what could become a very messy middle!
A swath of customers are downgrading their experience, price point or brand and focusing on value elements more heavily for their everyday lives meaning “everyday” premium will be a tough place to play, with perhaps older mortgage free Australians being the group that can offer some solace.
While people are trading down their core spend, the more premium one-offs will continue to be strong, as a treat and importantly with older Australians benefitting from higher interest rates.
So, for brands they need to aim up or aim down in 2024 but not for the messy middle.
Looking specifically at the media market as it heads into a tough 2024, we will see the more nimble local brands reacting more quickly and conservatively – larger global organisations will offer more consistency through the next 12 months, but undoubtedly the bounce and return to growth will be driven hardest by local clients getting behind the next growth opportunity, hopefully that’s in late 2024/early 2025 until then there’s going to be a little bit of holding on until the growth returns.
Mark Jarrett is CEO of PHD Australia.
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