Advertising spend had a rough end to a tough 2023.
The year came in with flat growth when stripping out unusual comparables such as spiking political spend.
However, many were relieved the end trough wasn’t as deep as expected.
The Standard Media Index (SMI), measuring media agency bookings, shows ad spend down 2.7% in the 2023 calendar year but this was still the second largest on record and better than pre-COVID 2019.
However, the market closed the year on a slide, with December down 9.1%.
The year was toughest in a decade, according to media analyst Seven Allen, Pearman's director of strategy and research.
“Worst month of decline for the year, and this a year where 10 months were declines. Cost of living is driving pretty much everything if only momentarily,” he says.
“Business confidence has been in negative territory all year, bouncing around as it did in December.
“RBA interest rate hold should buoy business confidence, but as ABS (Australian Bureau of Statistics) retail sales show, consumers will not be out of this for a few months.
“We believe these subdued and volatile conditions will continue for at least this first quarter of 2024.
“This is a tough advertising media market and is getting tougher.”
Chris Androulidakis, PHD’s Australia operations director, says the retail category drives a large share of ad spend and has been relatively resilient, finishing the year at a slight decline of -0.6%.
“There continues to be uncertainty in the market and recent changes to tax rates, RBA announcements and cost of living pressure will certainly have a greater impact than the year prior,” Androulidakis says.
Outdoor media was the standout sector, rising 15.1% for the year.
“Out-of-home saw significant growth due to increased urbanisation, mobility and advancements in technology,” says Androulidakis.
“We will continue to see growth as we move forward with enhanced measurement through MOVE 2.0, standardisation, transparency and verification.
“Video ad spend will see strong gains in 2024 as we continue to see the shift from broadcast linear television to Total TV.
“The benefits and immediacy of dynamic ad insertion from a creative standpoint and custom audiences / data partnerships will also help grow this channel.
“Large scale exclusive events such as 2024 Paris Olympics will also bring additional spend to the market but expect a competitive landscape in and around this period. The timing of the Olympics will likely coincide with the launch of additional streaming services which compete for ad spend.
“We’re already seeing movements in audio spend as the channel moves towards total audio and digital inventory grows. Improved listener experience through AI will also benefit audio players who are investing in this space – as a result we expect a share shift and greater competition in market.”
Nick Behr, founder and CEO at Kaimera, found the numbers pleasantly surprising, contrary to his initial apprehensions and market discussions,” says
“The figures seem to align with the current economic climate, suggesting that a soft landing could indeed be possible,” he says.
“This will result in an increase in media spending as the year progresses, potentially leading to this fiscal year becoming the most significant ever in terms of media expenditure."
“But the annual ad spend results suggest that despite challenging times, brands remained committed to delivering growth across their portfolios and are seeing marketing as an investment for growth instead of a cost centre,” says Chambers.
“The growth in digital, driven by video, gives insight into the mindset of many marketers around the need to build up, and in some cases build back, their brands after the industry largely defaulted to performance focused strategies to stay afloat over during the pandemic years.
“Brand focused strategies, utilising formats such as video that can tell a deeper story, is likely to be a critical element on many marketing plans in 2024 as we move further away from a reliance on pure performance strategies and into holistic planning and activation, with brand at the forefront.
“2024 is going to be a defining year for many marketers, and while the economic challenges aren't going away anytime soon, I'm expecting to see more brands move towards a focus on foundational organisation and brand building.
“This means getting their martech, media and measurement in place so that they drive operational efficiency and can accurately determine the impact of their media dollars. Savings from efficiencies can then be used on brand efforts, securing more long term growth and aiding in positioning marketing as a growth centre within an organisation.
Nicola Barnes, iProspect Group Investment Director NSW & Vic, sees some positive changes coming in 2024 with more categories showing signs of a comeback.
“Given the easing of inflation, some may not have expected another pause on interest rates today, however we think there will be less nervousness around advertising expenditure, though potentially still a short-term market versus pre-pandemic years,” she says.
“Hotels, resorts, and airlines are experiencing growth and so we do expect the travel and tourism categories to grow this year as airlines increase flight schedules and thus having a knock-on effect on hotels.
“Outdoor has really been the standout when it comes to recovery from 2020 and performance in 2023, it is also fast becoming a very future proofed channel.
“Though we do expect its growth to slow this year, the OOH industry is continuing to invest in their digital offerings. Be that more digitised panels, enhanced audience planning capabilities, innovative formats, and something that we are working on with our clients at iProspect is measurement studies that are proving that OOH campaigns are driving actual business outcomes.
“It's going to be another strong year for digital video too. We have just heard that Netflix is gaining momentum and set to change their default option to the ad tier model. Driving volume to the ad product is likely to make Netflix another line item on our screens plans, and with Amazon set to enter too, we expect to see linear TV spends take a further hit this year.”
"No surprises that outdoor is still the golden channel and continues to ramp up. And they deserve it. The outdoor companies got hammered over Covid and they were brilliant to work with when we needed to cancel out of contracts. So good to see them back bigger and better than ever and with imminent arrival of MOVE 2.0 outdoor is in a very good space.
"Outdoor is definitely making it’s way on to more our media plans due to its strength across the full funnel from broadcast awareness to tactical campaigns to driving action close to the point of purchase. It does it all. It is also the perfect partner for digital to drive online sales and our performance media team have loved the access and ease of programmatic outdoor buying adding another channel to their mix.
"Video is also on the increase on the back of smaller clients investing into the more affordable streaming platforms. Audio / visual creative assets will always be popular with advertisers as it is a big driver of emotion. Don’t get me wrong, traditional TV and cinema will always be the masters of delivering emotion, but the more affordable video platforms have allowed more clients to play in this space.
Ross Hastings, managing director, Ne-Lo Business Design, suspects the growth of outdoor is almost entirely down to its digitisation and is therefore part of the digital growth trend.
“I'd love to see SMI break outdoor down by traditional and digital as they do with video and audio,” he says.
“The companies that win here will be those with sharper focus on developing distinctive brand assets and codes to combat misattribution and ensure standout visibility.
“They will prioritise creating and consistently applying unique, recognisable branding elements, that use all media as dynamic platforms to maintain clear brand identity and consumer recall in a crowded marketplace. As always, in this world of increased opportunity, the magic will be in mastering the fundamentals."
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