Australia’s advertising market is showing resilience against the backdrop of economic woes and a global downturn in the digital platforms and social media.
But the dip in local ad spend in December, as measured by media agency booking, caused a scramble back to the forecast spreadsheets.
SMI (Standard Media Index) numbers show a 10% fall in December compared to the same month the year before and a dip of 0.2% over the quarter.
However, the full year closed 6.9% higher to nearly the $9 billion mark. The market is now 10.9%, or $875.7 million, larger than it was in the pre-COVID
Andrew Murray, head of trading at UM, says the SMI numbers tell a tale of two distinct chapters, with annual growth and the market back at levels larger than pre-COVID.
However, the real story is in the December quarter which saw the market contract.
“It is evident that that economic impacts, such as inflation in the Australian market not seen since the 1990’s, a series of eight interest rate rises (with more slated for early 2023) and Australian retail turnover falling 3.9% in December 2022 after 11 consecutive months of growth, that Australian households are feeling the impacts of these combined economic factors and this has started to flow onto ad-spends,” he says.
“There were also interesting insights in the channel spend figures with positivity surrounding outdoor which is now back above $1 billion in annual spend and cinema which saw ad spend improved considerably. Australians (and clients/agencies) seem to have shaken off any COVID hangover for these channels.
“However, for screens the trends show a movement towards more converged audience trading with a -2.0% drop for Linear TV and a +13.4% for Direct IO BVOD.
“For UM Australia clients, this is a core focus in Q1, 2023 as we manage the considerable audience fluctuations across screens with several core trials for test/learn approaches underway.
“The coming months will paint a much clearer picture on how 2023 will play out. However, it is expected that the Australian economy should narrowly escape falling into a recession which is a decent outlook for the Australian ad spend market.
Rob Shaw, group account director, Adholics: “Whilst it's nice to see year on year growth within the market, especially across OOH and Cinema, 2022 was certainly a tale of two halves, the decline in ad spend in December more than likely a taste of what's to come in 2023.
“As global and local economic pressures continue to take their toll on businesses and consumers alike, we'll continue to see an exponential shift of share of spend into digital/ search/ social as marketing ROI once again comes under the microscope.
“If anything, 2023 might provide an opportunity for those potentially less risk-averse companies to drive long term business success, cementing brand growth through excess share of voice (ESOV).
Bohemia CEO Paul Hutchison: "The continued bounce back in investment across 2022 has been impressive but the December figure might just be an indicator of what's ahead.
“Arriving here from the UK in November it was noticeable that the cost of living crisis impact was a little delayed versus the UK but it is now very much here and is having an impact on consumer confidence and spending.
“Having said that, I don't see a downturn as inevitable and at Bohemia we see growth in handcrafted media solutions designed specifically for the unique opportunities and challenges our clients face - and opportunities to deliver greater share of voice for those clients if competitors are pulling back spends."
Paul Wilkinson, commercial director, Half Dome: “This is yet another outstanding result. The market has shown fantastic resilience over the last few years, and the fact we have finished up almost 7% is phenomenal.
“Although December is back 10% year on year, this has to be viewed in context. December 2021 was an anomaly with record levels of investment; therefore, YOY declines were expected.
“The biggest outtake for me is not so much in the overall volume of spend but how the profile of the Australian market has changed over the last few years, with a huge swing into digital channels.
“Looking more closely, we can see this trend playing out in individual channels: linear TV is down 2%, whilst digital video is up 3.1%. Linear radio is up 3%, but digital audio is up 30%. Newspapers are down 8.2%, but digital news media is up 5.2%. Whilst this was inevitable, it’s fair to say the pandemic expedited this shift across the board.
“Looking ahead, time will tell in regards to how 2023 plays out.
“There are clearly challenges from an economic standpoint, and we appear to have a relatively soft start to the year, which we can see in the forward bookings for January and February.
“But again, context is important: Q1 2022 was up 15% - so is it unexpected to see comparably reduced investment into media? Likely not.”
Simon Reid, national head of partnerships at Initiative: "I don’t think anyone was surprised to see 2022 end in the positive YOY and deliver another record breaking year.
"Total spend was obviously buoyed by the Federal Election earlier in the year, but was not the sole contributing factor. Retail, Auto and Insurance categories all saw growth YOY and other sectors such as Travel continue to gain momentum ending the year 55% up.
"There was also much relief for OOH and Cinema vendors ending the year 25% and 82% up respectively, however both channels are still behind pre pandemic levels.
The headline is, however, masking the underlying and highly documented slowing in market driven by global economic factors.
"Q4 2022 was only back -.2% YOY, but December tells a different story, which was back -10%.
"Given the forecasted global headwinds, the market is relatively short, which is a clear indication that marketers and brands are adopting a 'wait and see' approach for now, making 2023 an interesting year to predict.
"This in itself represents huge opportunities for those brands willing to pre commit spend and take advantage of the market now."
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