The advertising market is showing strength against multiple economic headwinds, including weak consumer sentiment and rising inflation, according to industry analysts.
The latest SMI (Standard Media Index) numbers show advertising spend down in July by 4.2% compared to a strong month in 2021 which included the Tokyo Olympics.
Total July ad spend is back $27.9 million from last year’s record month total 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 shows growth of 2.8%.
Jane Ractliffe, the managing director of SMI AU/NZ, says this underlying growth means the Australian ad market has now delivered 30 consecutive months of year-on-year growth.
Pia Coyle, managing partner, Avenue C: “The ad market continues to buck declining consumer sentiment, with its 30th consecutive month of growth, and perhaps the most heartening post covid tick of approval is the fact that the Outdoor sector had the highest growth rate of any channel in Australia.
“The best kind of acknowledgement that Aussies are well and truly back to their pre-covid lifestyles, great for advertisers, and also a nice feeling as we step into spring. Whilst July saw strong revenue results, there is still a definite slowing of the market demand, which should present in the coming few months.
“This presents an opportunity for clients to drive healthy short term deals, and capitalise on the pre-2023 planning cycles, which have been somewhat slow to take off.
“This demand lull is likely to normalise as we move into a busy Q4, with key retail periods, like black Friday, cyber Monday and Christmas driving strong investment in market.”
Natasha Pelly, media analytics director, Publicis Media Exchange (PMX): “Despite the ongoing decline in consumer confidence, the ad market has continued to demonstrate resilience. Although year on year comparisons are difficult to make for TV due to the Olympic impact, we can look back to 2019 for a gauge on performance. When we do this, we see that July is sitting flat vs. July 2019, which is a really positive sign for the channel.
"Part of this has been driven by rebounding sectors like travel, which increased its TV ad spend by over 200% in July. Indeed, spend into outdoor aviation formats was also up over 500% year on year, showing clear signs of sector recovery despite the economic headwinds.
"Digital’s flat year on year performance may well be a sign of a softening ad market, as it posted its first non-growth month since September 2020, but it’s year to date position remains strong. We do of course expect some continuation of this softening but, as was the case last month, we remain positive about the outlook for the ad market overall."
Lorena Chiarella, Sydney trading director, UM: “Media spend continues to increase as a result of inflation pushing up advertiser budgets to maintain the same reach levels as last year and the year before.
“Additionally, fragmenting audiences mean advertisers need to spend more, in more places, contributing to the increase in such channels as digital (34% increase for January to July YoY) and OOH (July alone up 12% YoY). The total market for January to July is sitting at 9% YoY.”
Ben Willee, general manager and media director at Spinach: “Very interesting times ahead for the advertising market.
“Market conditions are a product of the global economy and Australian consumer confidence. How high will interest rates go? Has inflation peaked? So many questions, so few Crystal Balls.
“The good news is unemployment remains low, and in the short term interest rate rises haven’t been a disaster for household disposable income.
“If I was a betting man, I’d say the market will be stable for the foreseeable future with no large peaks or troughs.”
"At Impressive, we've seen large shifts in budget towards performance marketing from our clients in recent months and expect to continue to see dollars flowing into channels that are delivering direct ROI. The agencies that are able to deliver the best outcomes from performance marketing are those that are likely to be most resilient in the event of an economic downturn reaching these shores."
“It’s great to see another consecutive month of growth. And heartening that despite the increasingly challenging economic headwinds, brands appear to be continuing to invest to weather the storm.
"That said, the huge growth in outdoor is unsurprising, not only given 2021’s lockdown, but with QMS now officially in the ground in Sydney – a lot of brands in 2021 were hesitant to invest in outdoor within the COS given the uncertainty around panels being removed.
"Now they’re in, people are out, and the panels represent an additional media vendor on most plans – increasing costs to gain complete coverage across metropolitan Sydney. I suspect we will see continuous record growth up to December, particularly in digital, as retail brands ramp up attempts to maintain the high e-comm results achieved in the last 2 years.”
Mo Moubayed, cofounder of adtech Veridooh: “It’s not surprising that out-of-home was the highest performing category across all media in July.
"A lot of this growth is the sector naturally recovering from the depths of the pandemic but it also comes back to the hard work and investment that media owners and agencies made over the past two years,” says
“We saw great innovations in product and services, from smoother campaign planning, upgraded billboards, and improvements in transparency which is now paying off.
"Australia is the first market in the world where every media owner has activated third-party verification which has led to increased confidence in the sector and therefore greater investment. We have many case studies that show advertisers are returning to OOH, or investing in it for the first time, after a number of years due to increased transparency and accountability.
“Another area of growth which can sometimes be overlooked is innovative creativity. I believe the future of OOH is truly people, environment, and data-centric and when brands blend these three together to create eye-catching campaigns, they cut through the noise and connect with audiences on another level.
"For example, Uber Eat’s 3D billboard with oOh!media and its doggie sized billboard with JCDecaux had a lot of people talking and demonstrated how OOH can be immersive and interactive to bring a little bit of joy to people’s daily commutes. More of this out-of-the-box thinking will lure in more advertising dollars for the sector."
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