The advertising spend hard fall in March is not all bad news,
The dip in media agency bookings, down 5.5% for the month, according to the SMI (Standard Media Index), shows an expected sharp drop off in government spend.
The same month last year was a frenzy as the nation prepared for a federal election in May.
And the new Labor government is spending significantly less on advertising than the previous regime.
With the impact of government spend removed, the underlying dip in advertising revenue was 1.5% in March.
Carat’s initial analysis of the data shows the government ad spend fall has driven 4.5% points of the market decline and highlights the significance of this category in context of the total market.
Craig Cooper, chief investment officer for Carat, says it’s not unusual for a quarter prior to a federal election (March quarter 2022) to be artificially inflated.
He expects the second half will see ad spend improve from government compared to the March quarter.
“The (global) economy continues to be challenging for many clients and has resulted in some cautiousness with ad spend,” says Cooper.
“But we know that maintaining or increasing investment during these times should positively impact long term sales volume and market share for brands.”
Gaby Srour, media director at Avenue C, says he anticipates that by the months’ end consolidation of the declines should be closer to a -3% and still remain higher than 2019 figures.
“This is an extremely positive outcome, considering the current economic outlook,” he says.
And the current SMI numbers compare to a period in 2022 when government advertising spending was surging for the federal election.
“Linear TV and radio continues to see ad spend declines in the double digits across Q1 2023, meanwhile the digital counterparts of BVOD and audio streaming are seeing reported SMI growth representing 10-15% of total channel spend,” says Srour.
“Interestingly Nine had an extremely strong quarter against linear TV, while the network enjoyed a strong 42% audience share against major demographics, its commercial share punched above its weight delivering 47%.
“This was driven by the slew of premium back-to-back environments across their Q1 slate including Australian Open, Married At First Sight, and NRL.”
Joe Frazer, head of growth at Half Dome, says the reality is that clients are cautious about the economy, and this sentiment is reflected in their ad spend choices, despite advertising circle echo-chambers touting investment through uncertain times being the only path to growth.
“The Australian ad market is also still recovering from the unprecedented impact of COVID-19 on consumption and behaviour, and the pre-Federal election advertising expenditure.
“I for one am not worried about the slide in TV more so than other channels, and suspect this is more of a correction (maybe overcorrection).
“The next six months will be a good watch, the economy and inflation could have small, medium, or significant impacts on how we see clients investing, and I personally believe we might see ad spend enter a period more reflective of the global economy – which presents opportunity for intelligent clients and agencies.”
Brianna Wells, head of partnerships, Initiative, Perth, says categories such as travel, retail and automotive seeing strong growth is testament to the fact that advertiser confidence is back.
“This is a shift to pro-active forward planning as opposed to reactive for these categories. However we can’t ignore the rising cost of living pressures and inflation, a top-of-mind consideration for many advertisers which appears to be having an impact on smaller categories and effecting growth,” Wells says.
“Although spend overall is only back 1.5% excluding government, there is a clear shift towards digital channels which opens up pockets of opportunities for advertisers.
“It is unsurprising to see the shifts in video spend from TV to digital based on latest audience consumption data. VOZ has now given media agencies and networks alike the tools to plan Total TV and use standardised industry data to inform spending.
“More than ever, Total TV is at the forefront with converged trading a focus to drive growth back into the video category and show the strength of utilising both TV and digital. Similarly, audio will look to follow this path with the release of Radio 360 in the coming months.
“The short of it: ad demand is high with the likes of OOH remaining highly competitive. The real opportunity for media agencies and advertisers is to leverage the tools at our fingertips to ensure ad spend is aligned with shifting audience trends moving further into 2023.”
Involved Media Australia group managing director Sarah Keith says it's been a tough six months to March with ad spend falling from a +9.6 % cliff from October to November 2022 leading to a cumulated decline of -1.6% over the period.
"The latest SMI numbers illustrate what all platforms other than OOH and Cinema have been feeling, a significant year on year decline," she says.
Financial year to date OOH growth continues to be significant with the SMI numbers showing that the sector grew by 88% of TV’s decline.
"Whilst the missing election related millions are continuing to have a significant impact on the overall numbers the FYTD figures are showing +1.1% with strong retail, automotive and travel," she says.
"Notably travel forward bookings remain strong despite the reported ongoing issues around airfare capacity and price while travel agencies say booking volumes for cruise passengers have eclipsed 2019 levels and on the way to setting demand records."
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