The advertising market, as indicated by media agency bookings, is heading to more stability despite the relentless march of brutal monthly dips, according to industry analysts.
But don't open the champagne yet. Ad spend fell again in May, this down 5.3% overall with television at -12.3%. Outdoor media was the only major sector reporting growth with bookings up 1.6%.
The calendar year is tracking down around 2% so far and market analysts see an improvement in forward bookings, describing it as a stable note in the current down hill run of ad spend.
The latest ad spend numbers extracted from the Guideline SMI (Standard Media Index) payment systems shows that 90.5% of last year’s June ad spend has already been confirmed (excluding digital) with a week of trading numbers still to come.
"There are definitely strong signs of market improvement,’’ said Guideline SMI APAC managing director Jane Ractliffe.
A part of that might be enthusiasm for end of financial year (EOFY) campaigns. And some media agencies report a rise in optimism among clients.
Anthony Fargeot, VP of growth at Bench Media, sees some green shoots.
“It is great to see more forward bookings and strong growth for some media, especially in digital video,” he says.
“However, it is worth noting that the overall trend is down 5.6% with the majority of the media types declining.
“In addition, the latest news about inflation and the pressure for another rate hike may negate the benefits of the tax cuts freshly kicking in this financial year. I don’t think we are at a turnaround point… far from it, actually.
“It is more likely that advertisers will keep on exercising caution when it comes to their advertising investments to keep on par with the defeated consumer sentiment. I would also expect investments to keep shifting to digital due to higher targeting capabilities and lesser forward looking commitments.”
Sam Willmer, state planning director, UM, says the latest report reveals some early signs of recovery.
“The resilience of regional investment and the strong demand for outdoor advertising are encouraging signs, suggesting a potential uptick in longer lead time broadcast channels in the coming months as new financial year budgets enter the market,” says Willmer.
“With this in mind, it’s still very much a case of cautious optimism. Continued flat or decreased investment in key verticals like alcohol, communications, financial services, entertainment, and retail indicates that financial austerity measures will likely continue to impact non-essential spending for both businesses and households in the near future.
Ante Pejic, Mindshare’s head of marketplace – Melbourne, says the numbers aren’t surprising, particularly when many media owners are going through major restructures.
“And while a 5.3% YOY dip in ad spend might initially raise eyebrows, it's important to view this through the lens of the unprecedented economic landscape we've seen since COVID.
“The market is clearly undergoing a correction, and some recessionary pressures are to be expected. However, unlike the uncharted territory of the pandemic, we're dealing with a more traditional fiscal cycle this time around.
“We know the levers to pull, and with smart, adaptable strategies, brands can navigate this period and come out stronger on the other side.
“This isn't the time to go dark – it's the time to get creative and connect with consumers in meaningful ways."
Brodie Carr, account director, Claxon, says the latest numbers inspire confidence that a turnaround is imminent.
“While there is still progress to be made, the upcoming elections are expected to bolster growth in the government sector, potentially enhancing consumer confidence by addressing current cost-of-living challenges,” says Carr..
“Retail, which showed a 5.7% increase in the latest report, signifies advertisers' confidence in revisiting targeted branding and path-to-purchase strategies.
“This is largely due to ongoing advancements and education in audience measurement tools as well as demographic targeting, which reduce previous inefficiencies such as wastage across offline media channels.”
Sue Cant, head of investment at This is Flow, says it “feels” like a start to an upturn and with June ad spend forward pacing looking healthy versus so far this year, there are a couple of good signs.
“But it is still not the time to be getting complacent and donning the rose-tinted glasses, thinking we are returning to former glory – we are not there just yet,” says Cant.
“My reticence here is that of all the major media, at a topline channel level, it is only OOH that are experiencing a pretty consistent light at the end of the tunnel, seeing another positive results period with bookings growth up 1.6%.
“And I am not taking anything away from them here, it’s great news and they have seen significant growth for quite some time now which is very well deserved, but unfortunately, we’re not seeing those mirrored positive steps for other media just yet, so I’m still wary of popping the champagne right now.
“When we start to breakdown each major channel, Regional is the area that’s really interesting me at the moment and I’ve had a watchful eye on this for a while. Particularly with RTV showing the lowest level of decline across Linear TV, slowing the pace overall somewhat.
“We can see positive momentum continuing when looking at Regional Radio where we are seeing growth in bookings of almost 10% and then saving the best to last from our regional friends, with print bookings up 29% - where are all the Print naysayers now?
“Cinema will see some wins in the next results, given June has been such a massive month of releases with Inside Out 2, Despicable Me 4 and a Quiet Place, chalking up over $15m revenue over the last weekend alone, driving the improvement.
“So, whilst a lot of us will be quietly optimistic for the second half of the year, I’m more of a ‘glass half empty kinda girl’, as let’s be fair, we’ve all been burnt here before - so we are very much approaching with caution.”
Nick Murdoch, managing partner, Yango, says negative growth is never ideal.
“However, a top-line number down 1.8% for the financial year is not the end of the world - given the previous year was a record,” says Murdoch.
“It seems worse because our local media companies are getting hammered as spend moves elsewhere, that is, to the global platforms and streamers. It’s definitely a concern for Australian media companies, and unless they start innovating, and quickly, the money’s not coming back anytime soon. What this means for the wider ecosystem in Australia I’m not sure, but we’ve hit a fork in the road for sure.
“In terms of the overall market getting back to growth, that’s unlikely to happen until interest rates come down and consumers have more money to spend, so do these numbers indicate a turnaround? Not yet.”
Michelle Tempest, planning partner, Half Dome, says an uptick in ad spend compared to previous months isn’t surprising, particularly with the EOFY being such a key time of year for many categories.
“Consumers have been conditioned to wait until the EOFY to purchase any big ticket items in order to get the best deal and, with more in-market customers flooding the market as a result, we’ve seen retailers in particular increase their investment to capitalise on this,” says Tempest.
“As we look forward to FY25, the conversations we are having with our clients are optimistic, indicating that after months of ‘holding steady’ while we waited to see the impacts of rate rises on cost-of-living, the light at the end of the tunnel is getting closer.
“A continued discussion remains around driving value and efficiency, making every dollar work harder. As a result of this, we are seeing a change in sentiment and direction to spend in linear TV.
“Where the word ‘mandatory’ historically appeared on briefs next to the word TV, there is now a more robust conversation about a screens approach that comprises solely of online video, which is reflective of the increase in ad spend on streaming platforms.”
Chris Parker, founder and CEO, Awaken, says the new financial year brings a fresh landscape and clients are excited for the latter half of 2024.
“Budgets are unlocked, ambitious targets are set, and it feels like we’re emerging from a lockdown. Despite the presidential debate (seriously, is that the best they can do with 300 million people?), there’s a palpable sense of optimism,”: says Parker.
“May’s numbers and the June projections paint a clear picture of the market’s resilience. Digital TV is on the rise, out-of-home is gearing up for an amazing six months leading into summer, and audio remains a cost effective powerhouse, especially with the latest targeting advancements. The figures make it obvious why Nine and other groups are restructuring – ad spend has taken a hit, and Meta was the lifeline for some.
“Looking ahead, the next three months are pivotal. With inflation at 4% and potential RBA rate hikes in August or November, there could be an impact on consumer confidence and ad spend. But ever the optimist, there’s hope that the worst is behind us.”
Mollie Cross, trading manager, The Media Store, says the cost-of-living crisis continues and impacts consumer’s willingness to part with hard-earned income, beyond the necessities.
“As a result, marketing strategies seem split into two schools of thought: take the ROI hit by focusing efforts on those with discretionary spends – including brands in sectors where spends are on necessities (e.g. groceries, utilities etc.) – or reduce risk by relying more on short-term opportunities to reduce costs,” says Cross.
“The impact of this is, while we may be turning a corner, growth seems a way off, and is being buoyed by a concentration of demand across an increasingly narrow group of discretionary spenders, as opposed to broad market uplift.
“Despite Guideline (SMI) delivering an optimistic position, I believe we’ll be unlikely to see investment stability until discretionary spending lifts, whether facilitated through government support, a more diversified approach to slowing/reducing inflation, beyond interest rate hikes, or additional measures put in place to regulate crisis profiteering.”
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