Credit: Sebastian Unrau via Unsplash
Ad spend is holding up in Australia but most want to see June numbers before declaring a better industry outlook on the back of interest rate cuts.
May numbers on media agency bookings show a 7% fall but so far this calendar year ad spend is 3% higher than the same period last year.
However, analysts want to see a month clear of federal election numbers to determine whether the second half of 2025 will be better than the first.
Out-of-home, with 15% of total ad spend, is still surging ahead, up 4.6% in May.
Market analysts are more cautious on free-to-air television (25% of ad spend), down 13% in May.
ASX-listed television player Nine Entertainment in May reported total TV advertising revenue increased by almost 8% in the March quarter but sees uncertainty ahead.
“Definitely not out of the woods,” according to Steve Allen, media analyst at Pearman Media.
“But the optimist in me, plus some consumer facing research and sentiment data, definitely says we are becoming (that is the consumers) more confident.
“Morgan Research’s Net Buying Intention (major household items) has crept up to a 3 year high.
“Plus, both mortgagees (and renters), both roughly 33% of the population, are feeling more confident, in part in anticipation of the RBA rate cut (which could be 0.5%, essentially a double) next week, further easing of financial pressure.
“Never-the-less, getting consumers to spend will be a challenge, in our view, for the rest of the year.
“Those canny marketers who give consumers a reason, i.e. advertise to them, will win.
“The second half of the calendar year is unlikely to mirror the first half; i.e. advertising spend/investment, growth.
“Consumer ABS Retail Sales will tell the story, and have today, with ABS May 2025 Retail sales just released, up 4.09% best growth rate since January, and nearly equal to this.
“Signs of green shoots, but no emphatic consumer conviction. Outlook cautious but improving.”
Rebecca Segalla, group investment director at Magna, said the ad market, although softened in May post the election, the year to date figures are still relatively strong at +3.0%.
“With Australian economic indicators sitting in a better position, global pressures are still influencing spends and creating caution amongst advertisers,” Segalla said
“With the US and China potentially coming to a trade agreement, this may settle the market however the impact of the US tariffs on the Australian economy is still an unknown at this stage however will almost certainly play a role.
“If brands haven’t already approved their Black Friday budgets, I suggest they prioritise. Leading into the key pre-Xmas retail period, we traditionally see an influx of overall market demand - and anticipate it to be earlier this year as brands start to run their sales in the first week or two in November.
“It's no surprise that Streaming/Video is up (7.8%) YOY, we expect this to continue as the BVOD / streaming market continues to expand.”
Sean Eustace, investment director, iProspect, a dentsu company, says there are signs that the tide may be turning.
“The RBA dropping rates in May and further cuts being forecast for later this year has coincided with total ad market growth of 1.2% (excluding government and political parties spend).
“Additionally, the SMI figures reveal some categories are seeing strong investment with double-digit growth from Wealth Management (+22.1%), Insurance (+15%), and Banking (+13.1%).
“Discretionary sectors are also gaining momentum like travel (+14%) and consumer electronics (+22%), suggesting a cautiously optimistic shift in consumer outlooks. For advertisers, this presents an opportunity to re-engage lapsed consumers with outcome focused media strategies.
“Outdoor media posted a 13.1% year-on-year increase, adding $66 million in spend, a result likely driven by two key forces.
“First, the continued uptake of programmatic as advertisers see the benefits of greater flexibility in buying and improved targeting capabilities. Second, there is a rising demand for high impact, high attention outdoor formats that cut through the noise in a fragmented media landscape.
“At iProspect, we are guiding clients through this shift by combining data-led programmatic trading with creative, attention-grabbing formats. This approach has been proven to deliver on business outcomes, not just media metrics. It’s this performance mindset that ensures our clients are ready to lead as confidence builds.”
Alfie Lagos, director & founder, Lexlab, said the May dip in ad spend isn’t a sign of structural weakness in the market.
“It’s a lagging response to a chaotic first quarter, where confidence hit the floor and advertisers did what they always do in uncertain times, they paused,” he said.
“But let’s be clear: this is a reaction, not a trend. Ad spend isn’t falling because the market is broken. It’s falling because confidence hasn’t been repaired yet.
“We’re still feeling the aftershocks of March, when business confidence fell to -2 index points according to NAB’s Monthly Business Survey in May. That month was marked by global instability, weak profitability, soft demand and a drop in government-related ad spend. Combine that with jittery rate expectations and it’s no surprise the brakes went on.
“But there are clear signs the tide is turning. Westpac-Melbourne Institute’s Consumer Sentiment Index rose to 92.6 in June, up from 92.1 the month prior and well above its 2023 levels. It's still in pessimistic territory, but the improvement reflects easing inflation and a positive response to recent rate cuts.
“The RBA has already made one move with a 25bp interest rates cut. But if it really wants to stimulate momentum, a bolder shift, say 50bp, would send a stronger signal to households and help drive economic re-engagement. The government’s role is equally important. With business conditions flatlining at zero index points in May, market leadership matters more than ever.
“Confidence isn’t just a mood. It’s momentum. And if we want a stronger back half of 2025, we need the decision-makers to lead, not lag.”
Amy Carr, general manager of growth, Yango, said a deeper dive reveals areas of resilience and growth.
“Outdoor media, for instance, delivered record May totals with a healthy 4.6% increase,” said Carr.
“Similarly, cinema jumped an impressive 12.8% year-on-year, and magazines remained in positive territory, up 0.9%, with total year to date bookings +3%, which are all positive indicators.
“The reported lateness of digital bookings, with figures currently showing a 6.5% decline, requires some perspective. We continue to see the strength of TV streaming/video sites not only in the figures (+7.8% year-on-year) but in uptake across the Yango client portfolio.
“Automotive is interesting, a very established category being disrupted by an influx of new brands into the market. Established brands are starting to see the sales impact and subsequently re-evaluating their media spend. We are not surprised to see declines driven by the traditionally big spenders in this category while the new players are spending cautiously while they scale.”
Mollie Cross, senior trading manager, The Media Store, said May was destined to be a challenging month.
“We’re coming off the back of a bolstered April, which enjoyed the double-whammy of Easter and pre-election augmenting April and pulling spends forwards,” she said.
“When looking at May, the election falling early in the month minimised the potential uptick in investment from the political category.
“Late investment seems to be a persisting trend in market, with the challenging consumer landscape continuing to cause uncertainty as clients tentatively consider their best route to market. These challenges have flowed through to the auto and retail categories, which seem to be holding funds for a truncated EOFY trading period.
“The channels winning in the period – namely outdoor and cinema – are those best positioned to offer consistency, in environments where there’s little upside for trading short-term. Bolstered outdoor investment is expected to hold into June, though cinema investment may slow in June, with May having been boosted thanks to major blockbuster releases in-month attracting heightened audiences and investment in equal measure.
“Video continues to be a hotly contested environment, with TV streaming and video sites winning where linear TV loses out. I expect this trend to extend into the back half of the year, with Seven and Ten vying for a much-needed increase in share of ad spend YOY, after Nine’s early-Q3 domination in 2024 thanks to their Paris Olympics and Paralympics coverage.”
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