Media agency bookings have taken a 13% hit in February due to market uncertainty caused by Trump and Brexit overseas, a drop in government spending and a shorter reporting period than last year.
Agencies bookings reported to the SMI were $467.7 million for the month, but this figure should rise once late digital bookings are taken into consideration.
Large multinationals, particular those that produce goods, have tightened their purse strings due to market uncertainty over the start to Trump's presidency and ongoing concerns over what shape the UK's departure from the European Union will take, says Maxus national head of investment Ricky Chanana.
“We're seeing a fairly slow start and what's happening in the US and Britain has impacted quite a bit on big clients, such as FMCGs and automotive, pulling back a little bit,” he tells AdNews.
“If you think about it, the Trump and Brexit effects happened Q3 and Q4 last year and we're starting to see that spread across the world.
“Because Australia is quite far away, it's hard to know how deep or long lasting the impact will be but I would think we will have a lower Q1 and Q2 before it picks up again.”
Trump's presidency and the Brexit decision are causing companies to rein in spending over uncertainty about how their policies will impact trading conditions and access the labour.
In the UK, the government has refused to protect European workers who currently reside in the UK, which is sizeable chunk of the country's workforce. There is also uncertainty about new trade agreements that will need to be thrashed out once the country leaves the EU's single market.
Trump's protectionist policies, which are being resisted by several blue chip companies, could inflate production costs if US manufacturers are forced to bring home production from cheaper labour markets like Mexico.
Newspaper bookings suffered the largest slump, down 35% on the previous year. This figure was severely impacted by three days of fewer print editions, including the larger weekend editions.
Television was down 6%, radio was down 11.3%, outdoor dropped 12.2% and digital was down 19% but is expected to be flat once late bookings are tallied.
SMI AU/NZ managing director Jane Schulze said product category data showed softer demand was widespread with the majority of large categories reporting double-digit declines.
One of those categories is government, which a $6 million decline in bookings (-26.2%) to $16.9 million, a return to normality after last year's Federal Election.
“Australia’s agency market will increasingly face tougher comparative periods as we move closer to the one year anniversary of the Federal election last July, and then the Rio Olympics in August,” she said.
“However, March 2016 experienced a similar level of demand as we’ve seen for February 2017 so hopefully that may make March an easier month from a comparative standpoint.”
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