Exclusive - How high can the ad spend canary go?

Chris Pash
By Chris Pash | 6 July 2021

Australia has had four months of ad spend growth in a row, according to media agency numbers analysed by SMI (Standard Media Index).

May was the highest ad spend since 2016 and was 4.5%, or $30.7 million, higher than pre-COVID May 2019 ad spend.

About $300 million in extra media investment flowed into the market compared to May last year during the depths of the economic fallout from the pandemic.

The trajectory is higher than even the most optimistic forecasts. TV and digital are back to pre-COVID ad spend levels.

And SMI’s Forward Pacings data shows the value of confirmed June ad spend (ex digital) already 36.4% above that reported in June last year.

The numbers show a very strong market, as was expected, says Steve Allen, director of strategy and research at Pearman.

The two publicly listed metro TV networks, Nine and Seven West Media, had signalled June quarter revenue would be up around 50%.

“Those predictions should be exceeded, based on April/May,” he says.

“The pacing of May certainly points to another stellar month upcoming for June.

“Will this pace of recovery continue the trend in the new Financial Year? SMI pacing figures point to a continuation, if anything seemingly a potential lift of this significantly strong recovery.”

Ben Willee, general manager and media director, Spinach: “Just an incredible result and we are very fortunate to live in an environment with a strong economy.

“But every rainbow has it’s rain and it will be very interesting to see if the momentum continues through the current lockdown.

“The ad market is a function of consumer confidence which is currently very strong. Assuming we can maintain high consumer and business confidence the market will remain strong.”

Nick Durrant, managing director at IPG’s Magna: “You're starting to see the build on TV and digital that we saw in Q4 (December quarter) last year to really come through.

"And it's not let off from a TV and digital perspective. And everything else seems to be building steam with it.

“Outdoors has also had a coupleof good months pick up as well.

“You have to caveat this with what next month brings, who knows?

“But on learnings from the lockdowns that have gone through the last couple of months, spend wasn't changing too much. It seemed to be picking up very quickly afterwards but I'm not sure what it will be like this time around.

“If you look at the overall economic performance, there’s a lot of money in the economy right now looking for a home.”

Steven King, joint managing partner, Frontier Australia: "A huge increase in year on year spend was expected, but what’s really pleasing is that normalised spend is up on the same period in 2019 (pre COVID).

“And of particular interest is the comeback for out-of-home. We’ve been waiting for this to happen for some time, and I think it’s a reflection of confidence continuing to build for clients as they look to capitalise on strong economic conditions."

Pia Coyle, managing partner at Avenue C: “It seems unbelievable as we sit in another (Sydney) lockdown, that we are actually seeing growth in SMI for May.

"It speaks to the robustness of the market, and shows that perhaps consumers and clients are less spooked by the now normal virus ebbs and flows.

“This is reflected in steady consumer confidence, and also market conditions, reflecting the growth, with tightening avails across key channels, and lengthening lead times still a hot topic with clients.”

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