ANALYSIS - How high can the ad spend canary go in Australia's red hot advertising market?

Chris Pash
By Chris Pash | 7 October 2021
Credit: Alain Bonnardeaux via unsplash

Ad spend, which has already surged past pre-pandemic levels, is about to smash records as the advertising market hits the last quarter of calendar 2021.

Industry players and market analysts are scrambling to reforecast as advertising, as recorded by media agency bookings, takes off.

According to the SMI (Standard Media Index), August was the sixth month in a row of year-on-year growth. The month was 26.6% higher than the same month last year, up 11.6% on 2019 levels and 4.1% above 2018.

The SMI data indicates that FTA ad market revenues already above pre-COVID levels and are heading to “all time highs”. 

Market analysts, seeing the strong growth in SMI’s agency data, are more upbeat about the 2022 financial year. 

Investment bank UBS has upgraded its metro free-to-air (FTA) ad market growth forecast to plus 6.5% from $4%.

UBS also forecasts BVOD growth of plus 40% for the 12 month to the end of June next year. This implies plus 9.5% growth for combined metro FTA and BVOD.

Ben Willee, general manager and media director at Spinach: “It stands to reason that the advertising market is red hot.  There is currently a perfect storm of low unemployment, high household savings leading to high consumer confidence.

“That combined with long lockdowns in Australia’s two largest cities means smart brands are getting ahead of the revenge spending wave and ensuring their brands are top of mind.

“2022 is going to be a big year and the advertising market will continue to run like the Hoover Dam Spillway while consumers have jobs and are confident about the post pandemic future.”

Pia Coyle, managing partner at Avenue C, says the big numbers, with SMI jumping well above 2019 levels, has left many in the industry scratching their heads. 

“No longer is it just the big guys in town who are spending considerable volumes, thanks to COVID, emerging categories like BNPL, food delivery services and SVOD platforms, are now doubling down on investment to capitalise on our ‘new norma’ and every day it seems like new brands in these categories are making themselves known. 

“This coupled with aggressive spending from government, has meant other more traditional categories (insurance, finance, and FMCG for example) have needed to fight for inventory like never before. 

“And what’s even more interesting is that huge categories like Travel, Auto, Entertainment and Retail are only slowly returning to pre-COVID investment levels. 

“Big things to come when we finally open up nationally – it looks like the shape of investment is forever changed, setting a new floor for the Aussie ad market.

Steve Allen, director of strategy and research at Pearman: “The pace of recovery, plus the SMI forward pacing trajectory, sets the trend for a remarkable record year with the highest recovery growth on record.

“In our estimation for the end of year, this also means 2021 will be well above 2017/18/19, …double digit growth. 

“Even factoring out the roughly A$80+ million (by our calculations) for the Tokyo Summer Olympics, still has 2021 at an all-time record. It must be noted that whilst most media are recovering, we project both FTA Television and Digital will move to all time highs. 

“Digital now being well into the 60s share of total market, and growing at around 25%, has an overbearing influence on total media markets revenue.

Steven King, joint managing partner, Frontier Australia: “August continues to deliver for the industry despite the NSW and Victorian lockdowns.

“What I’m most excited about though is looking forward to the final quarter of the year, where we expect that as we emerge from lockdowns in our two biggest states, there will be a surge of activity leading into Christmas. 

“TV and digital have been the big winners so far this year, but the time is coming when both radio and outdoor will return to pre pandemic levels and ,dare I say it, maybe even cinema.” 

Ashwin Govender, client solutions director, Half Dome: “It’s been fantastic to see continual uplift in media spend across the industry. 

“The Olympics were obviously a massive contributor and one of the elements I’ve been blown away with both as in work and as a consumer was the 7 Plus App. 

“The multitude of viewing options meant that you could tap into niche sports to suit every interest. Not only does this provide a platform for underrepresented sports but also opens inventory for advertisers. It’s another string to the growing bow of BVOD in Australia with Nine Now offering a similar proposition during the Australian Open."

Tina Gavros, PMX general manager – trading: “The recovery in TV as compared to pre-pandemic levels in 2019 may in part be driven by a successful Olympic Games period, as well as the categories that invested heavier into the channel - which typically need to reach large audiences quickly, despite audience declines year on year. 

“Digital investment increased versus 2019 as advertisers entered the ecommerce sector, and while audiences in the digital channel were not as directly impacted by the pandemic.”

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