Media agencies report a rise in ad spend bookings with marketers now prepared to take a longer view, albeit with strong cancellation deadlines, despite COVID-19, say industry insiders.
The pandemic sparked a full retreat by brands as they re-assessed the market, sending ad spend into a deep fall.
Total media agency bookings in June fell 35.7% to $417 million, closing the financial year down 14.7%, according to SMI (Standard Media Index) numbers. That wasn’t as crushing as May with a record 40.4% drop in ad spend.
But media agencies now report a more positive market now, with consensus that the June quarter was the trough, the lowest point of the economic fallout from the pandemic.
This is backed by a pulse survey of members of the Independent Media Agencies of Australia. More than a third surveyed expect media spend to increase from their clients from September.
However, marketers are demanding better than usual cancellation terms, so they have more control over what has proved to be a quickly changing crisis.
Jane Ractliffe, the SMI AU/NZ managing director: "It remains a challenging market but the data proves we’ve moved off the bottom so the question is now how quickly the market returns to growth."
Willie Pang, CEO of MediaCom, is seeing encouraging signs, with briefs and planning between now and Christmas and into early next year.
“We're starting to see through the course of this calendar quarter a stabilisation in most clients, businesses and budgets,” he told AdNews.
“At the beginning of the coronavirus crisis people were basically planning week-to-week. So at least we've gone to quarter by quarter or half to half.”
Online retail is doing exceptionally well. “Uber Eats, in the delivery business, is doing really well,” he says. “Definitely digital direct to consumer businesses, all flying right now.”
Even in Victoria, with a second wave of coronavirus infections and a strict lockdown, business conditions haven’t collapsed.
Sarah James, managing director of Initiative Melbourne, says she hasn’t seen a big decline since stage four restrictions came in.
“It's good to say the market's starting to bounce back,” she told AdNews.
“It is certainly feeling a lot more positivity in the market, even though we are all stuck inside in Melbourne.
“I think it's probably everyone starting to say, ‘This is the new normal, we need to operate under these conditions and let's just keep on going.”
She says brands have got to be in the market or risk losing that brand equity.
Positivity has returned to the market, says Ben Willee, general manager and media director at Spinach in Melbourne.
“There are a lot of pundits out there in the market saying that the ad market has bottomed and we are slowly coming back to life,” he told Sean Aylmer in the Fear and Greed podcast.
“People out and about a little bit more and that's giving a lot of confidence to advertisers that the market will be back and it will be back hopefully reasonably quickly.”
Willee expects to see almost all of the top 10 largest ad spend categories start to come back in July and August.
This excludes Victoria “where we will have a bit of a few steps backwards” during the second lockdown, he says.
Nick Grinberg, head of strategy at Next & Co, says clients are exhibiting cautious optimism when it comes to increasing spend.
“I think they are still biding their time to see more signs of their particular situation recovering and their customers starting to spend again,” he says.
Jeremy Bolt, CEO of Hearts & Science, says media spend generally correlates with industry impact.
“If your core business is significantly impacted like an airline or cinema, chances are you are not going to keep spending on media or a media agency when your customers cannot access or enjoy your product,” he says.
Looking at gross media spend by category, around seven categories increased with an average increase of 12% and 32 (82%) decreased with an average decrease of 28%.
The technology, household supplies, healthcare, banks and in-home entertainment categories all exceeded 5% growth year-on-year.
“Those hit hardest were obviously retail, live entertainment, travel and recruitment,” says Bolt.
“What’s next? We can try to use the GFC as a model for the current situation but in many respects, it was different and I believe there are too many variables right now to have a clear view on what will come next.”
Sarah Melrose, general manager, ADMATIC, says the first reaction from some clients was to pull entirely out of the market.
“However, this was short lived, especially for longer term, smart marketers who realised they still needed brand building in market, in order to bounce back on the other side - it’s incredibly important to think long term,” she says.
“Most are all back to normal, or at some sort of increased levels. The situation in Victoria (so far) hasn’t dampened or decreased spirits or media budgets.
“This time round, it feels as though there is less panic in the market as it’s more of a known situation. We know restrictions are temporary, so there seem to be less knee jerk reactions.”
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