ANALYSIS - Advertising market riding above a gathering economic storm

Chris Pash
By Chris Pash | 6 October 2022
 
Credit: Oliver Sjostrom vias Unsplash

Australia’s advertising market is ripping higher, as brands seek the attention of consumers still spending despite gloomy economic forecasts.

Compared to pre-COVID August in 2019, the market is 13.4% higher, according to SMI (Standard Media Index) numbers.

August ad spend was down $5.9 million from last year’s record month but when the media most affected by last year’s Olympic broadcast are excluded (Metropolitan TV and their related Pure Play Video or Streaming Sites) the market grew 6.2%.

Stand outs are outdoor, up 34.9% to a record August level, Cinema more than doubling in the month compared to last year, and radio’s ad spend 2.1% higher.

Natasha Pelly, media analytics director - PMX: “Despite continued economic insecurity, Australian consumer confidence rose in September – the first time it has improved since November 2021.

“Although remaining much lower than earlier in the year, it is a positive sign for the ad market, which has so far shown much resilience.

“The latest SMI numbers demonstrate the ongoing commitment of Australian advertisers to the market, with digital ad spend continuing to grow at a healthy rate.

“Outdoor and cinema also continue to make great strides towards full recovery, now sitting just 5% and 16% behind pre-pandemic levels.

“Linear TV continues to hold fast and sits only 1% behind 2021 despite lacking the Summer Olympics.

“All said, the Australian economy and ad market do appear to be riding out the economic storm better than other international markets and we do not anticipate any significant drop in ad spend across Q4.”

Paul Wilkinson, head of commercial, Half Dome: “Another strong result for the ad market with some very bullish figures coming through across the board, seemingly at odds with the reported economic environment.

“Overall, I am not surprised at how things seem to be panning out between individual media channels. Outdoor has always been an important channel in Australia and has bounced back to life post-pandemic. I expect this to continue, though at a lesser growth rate.

“Similarly, radio looks to be finally catching up to other broadcast channels and showing growth. However, I think it's a channel often under-utilised within the media mix, which is true for both linear and digital formats.

“Whilst TV figures have been naturally skewed by the Olympics in 2021, I expect revenues will likely continue to be challenged throughout the year, even more so as Netflix & Disney+ move to an ad-supported model.

“Despite this, I maintain TV will continue to be an important channel on a media schedule as it delivers mass reach faster than any other channel. However, the reality is as it continues to profile an older audience, the impact will see the overall share of spend allocated to TV reduced.”

Huong Nguyen, group business director, Alchemy One: “Whilst speculation of an impending economic recession continues to loom, consumers appear to be less unnerved and fearful of interest rate stress, with the latest Westpac Melbourne Institute Index of Consumer Sentiment up 3.9% in September and consumer attitudes towards spending also improved slightly up 2.8%.

“This may also be mirrored in marketers’ continued emboldened desire to spend budgets (or risk losing them) to encourage spending, particularly as we head into the traditionally busy retail period.

“What’s been particularly great to see is the re-emergence of outdoor and cinema, perhaps now that we’ve since seen an extended period of ‘normalcy’ post COVID lockdowns and measures.

“However, beyond broad spending patterns, specific behaviours have fundamentally changed across these channels since pre-COVID days, so it will be interesting to dive deeper to see how and where those dollars are being spent across these channels.”

Sue Cant, head of media, Affinity: “Whilst August shows a slip overall, once we readjust for the Tokyo Olympics last year and take TV’s 11% decline out of the equation, it’s a much more growth-orientated picture across the wider market and marketers should still be comfortable in the knowledge they’re going to see good outcomes for their investment.

“I personally am loving the resurgence of the traditional channels, with Cinema continuing to break the mould, showing revenues in August over double that YoY.

“Given the volume of key releases that were held back during the time we all like to try and forget (lockdowns), it’s great to see these finally on the big screen through this year and with a few big hitters still to come, no doubt the growth trajectory will continue until end of this year and into next. For marketers, Cinema is a great extension to a ‘screens’ buy with untapped audiences here that are not consuming FTA TV.

“Also, great things are continuing in the OOH market with a record August, cementing that the hold of the pandemic has finally softened its grasp. I would love to see the growth breakdown of digital/programmatic against traditional here to get a sense for the programmatic uptake but a positive story any way.

“A much less pretty story when looking at the Digital Video market, historically being a ‘hero’ of the market for a long time we are starting to see growth soften here – well I guess it couldn’t continue forever could it?!”

Es Chandra, CEO, Glide Agency: “The ability of digital marketing to weather harsh economic conditions has grown substantially over the past few years, and as such it's becoming less likely that we'll see any major declines in ad spend unless facing something equally unprecedented.

“While economic activity may be slowing, plenty of industries, such as retail and travel, are escaping the squeeze, while the availability of low-cost marketing platforms such as TikTok, Facebook and YouTube offer even the smallest of businesses an opportunity to generate business.”

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