Industry analysts see a tough advertising market for the rest of the year.
The latest SMI numbers show agency spend down 1.4% to $6.93 billion for the 12 months to June, excluding government.
This year so far the market has been plagued by a lack of business confidence, global political uncertainty and a tighter credit market post the financial services royal commission.
Jane Ractliffe, SMI AU/NZ Managing Director: "As SMI’s data history has shown, it’s very unusual for the agency market to not grow and it’s taken an unprecedented number of negative events to deliver this knock."
And industry sources report soft conditions continuing into July and August
Pia Coyle, national head of investment, Ikon Communications, says there are no surprises in the latest SMI result.
“We are into our tenth consecutive month of declines,” she says.
“It’s tough out there, the market has not bounced back post-election slump, and don’t anticipate seeing a turn around this side of Christmas.
“Even channels bucking the trend and experiencing growth are finding the market challenging, advertisers who are in a position to maintain market presence are benefiting from softer market conditions.”
Elizabeth Baker, head of investment at Zenith Sydney, agrees that it's a tough market.
However, the second half numbers to come will be compared to a weaker second half last year.
There was a surge in in the first half of 2018 – predominantly fuelled by government elections/by-election campaigning and banking category spending in the wake of the Royal Commission - but this petered off markedly from August.
“It’s not all doom and gloom, there are pockets of good news,” she says.
Radio has held up and out of home is also bucking the trend. Radio was up 1.7% and Outdoor 4.5% in the year to June.
“Clearly the impact of weaker economic conditions is putting pressure on marketing budgets across an array of categories,” she says.
“As it currently stands, linear TV for example, would need to grow by 5% in the back half in order to offset their first-half performance.
“There were and are also indications of softer conditions throughout July and continuing into August and the ever-strong digital sector has not been immune to this with evidence of a slow-down in growth versus the same time last year."
Zenith’s forecast for full-year 2019 is that the market will round out at between mid to high 2%. More than 90% of the actual growth volume will come from digital investment.
Theo Zisoglou, general manager at the Bohemia Group, says the signs are worrying so far in 2019.
"We are experiencing GFC-style signs that the market has declined and it will be interesting to see if it will bounce back this year," he says.
Zisoglou points to tell-tale indicators of a struggling economy.
The property market is down which is also impacting complimentary categories such retail, home furnishings, appliances . The Australian dollar is the lowest is has been in more than 10 years. Low interest rates are being used to try to stimulate the economy.
SMI data showed a decline for the federal election in May.
"This is unheard of and not something I have seen all my time in media," says Zisoglou. "Generally there is an expected increase in an election year so to see a drop YOY was a big surprise."
And all channels are doing it tough.
"There is a higher than ordinary amount of short term / distress offers in market and it's coming from all channels and from big and small sized media partners," he says.
"All this points to a soft advertising market and we are yet to see any major signs of this correcting itself in the near future."
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