Industry analysts see some cost of living relief for consumers but little direct help in the federal budget for the advertising industry.
The federal budget, although balanced, overstates its ability to improve cost of living in the short term and as such will have a neutral immediate effect on consumer sentiment, Atomic 212° chief data officer and partner James Dixon told AdNews.
"The Government is trying to thread the eye of a needle with a conflicting headline priority of low inflation versus pragmatic cost of living support packages," Dixon said.
Both the ANZ Consumer Sentiment, latest IAB data and the NAB Business Sentiment report historic lows of subdued business sentiment and a drop in forward orders, particularly in retail—consumers simply aren't spending like they used to.
So the short term market outlook of 'survive til 25’ will continue PHD CEO Mark Jarrett told AdNews.
"The big news, the redistributed $23bn in tax cuts across 2024/25 was announced back in January," he said.
"This will undoubtedly see consumers ease their foot off the brake pedal from July, to give it some context, it’s the equivalent of 2 interest rate cuts so will drive spending stimulating consumer, business and advertiser confidence.
"Beyond this key measure the other economic announcements that will drive consumption pale into relative insignificance – the $300 energy rebate for every household is only worth $3.5bn, whilst the student debt indexation change might cost $3bn in the budget but will change debt levels for those individuals rather than increase their spending power.
"Ultimately until inflation dips another percentage point and sticks below 3% the RBA will look to quell any growth with a further interest rate hike, so in the short term the market outlook is 'survive til 25’ whilst a broader cyclical economic upturn will hopefully arrive in time for Easter to stimulate another period of growth."
Lex Lab director Alfie Lagos said the budget's proclaimed focus on curtailing inflation makes sense in principle, but let’s be real.
"The non-means-tested $300 energy bill relief and Stage 3 tax cuts smack more of electioneering than economic strategy, a kind of policy-making that feels more scattergun than surgical, not to mention ironically inflationary," Lagos said.
"The current sentiment combined with potential further rate hikes will likely prod risk-averse agencies and brands towards more measurable channels like digital and AI platforms.
"However, as Ehrengerg Bass and Peter Field have repeatedly proven, wiser, bolder, and usually larger, brands should view this as a chance to snatch up more share of market (SOM) during these lean times and maintain, or even increase, ad spends."
Which means we’re likely in for another year of depressed consumer spending, depressed client budgets, Icon Agency director of consumer Nick Zonnios said.
"Clever agencies and marketing teams finding ways to do more with less to convince people that their product is the one Australians should be spending their discretionary cash on," Zonnios told AdNews.
"My hunch is that while there’ll be measures including the previously announced and legislated amendments to the Stage 3 Tax Cuts that will keep money in people’s pockets, it’ll largely be helping those that are drowning get their heads marginally back above water.
"I’m not expecting swathes of people heading back to the movies or splurging on expensive clothes or restaurants or re-subscribing to the streaming services they’ve switched off over the past year."
Enigma managing director of media Justin Ladmore said the tax cuts and energy rebates could leave a little more disposable income, but it will still be complicated by other economic pressures and the positive impact muted… in the short term that is.
"Most advertisers will remain cautious until they see some positive shifts in confidence which means traditional broadcast channels will remain flat and the ‘quick win’ channels such as digital will flourish. But the brave brands should stand up and help inject some positivity into the market," Ladmore said.
"Take advantage of the clearer space and outshout your nervous competitors now. Play the longer-term game because the new Budget did have some good long-term economic strategies and structural reforms that will gradually restore consumer confidence."
Innocean head of media Kathryn Funari said tax cuts- about time; energy savings - great; HECS debt rebates- too late for me and rental assistance – thank God!
"But ‘taking the edge off costs’ isn’t enough. Personally, like most people I’ve spoken to, any ‘relief’ is simply going towards the basics of food, shelter (and maybe the occasional coconut water)," Funari said.
"Luxuries still feel like just that - a luxury - not an everyday occurrence. So best not to get ahead of ourselves just yet. Inflationary pressures could still be just around the corner. And the RBA and government have differing timelines and numbers, which is more than a little concerning.
"A big issue for media and creative agencies is the shortage of good talent and with record low unemployment rates continuing, this doesn’t look great for recruitment of good people. People are our product, and we need to nurture young recruits coming into the industry.
"However, as a side thought, if we can’t get young people into the industry, does that potentially mean there is hope for the older veterans amongst us to stay relevant? I am certainly hopeful."
Bench Media co-founder and chief operations officer Shai Luft said the budget will provided some limited cost of living relief.
"Given the balancing act between maintaining a strong economy and managing inflation, the subsidies on electricity, medicine and education should help reduce inflation in the short term," Luft told AdNews.
"I would expect businesses receiving tax incentives and enjoying the windfall of revenue from consumer tax cuts to redirect these savings into investing in digital capabilities including improvements in e-commerce, cyber security, digital media and marketing to future proof their business.
"These investments should benefit the marketing and media industry and it’s positive to see the government manage to balance driving economic growth while providing cost of living relief."
The Media Store chief strategy officer Sam Cousins said this years budget seems focused on finally addressing two years of a cost of living crisis and our growing longer term social issues.
"It’s great to see the budget addressing the gender pay gap by balancing super and valuing the care given by working mothers whilst they take time out of work," Cousins said.
"As we know women over 55 are the fastest growing cohort of homeless people, especially those who are divorced with no super after years of caregiving.
"The budget here has addressed future homeless problems and also protects future workers in our own industry.
"The social media pilot program investment is a step in the right direction for protecting what content children are exposed to and if successful could see more future restrictions for advertising to children.
"Currently even restricting social apps such as TikTok or snapchat doesn’t mean inappropriate content isn’t available, content is still discoverable through YouTube shorts and other platforms, so it will be interesting to see how this unfolds. Tighter restrictions in the future may also limit wastage on channels such as youtube."
"The stage 3 tax cuts finally come into effect from July 1. For many that could mean a boost in their tax return. This combined with stabilized interest rates and huge retail discounting in Q3 and 4 should see a spike in consumer spending (especially in lower value goods).
"The Q4 retail frenzy in the lead up to Christmas could be even more competitive for advertisers with the consumers as the winners."
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