SMI forecast: The adspend canary has its nose up

By Chris Pash | 26 September 2019
Getty Images/iStockphoto

The advertising media agency market in Australia is forecast to move into positive territory before the end of the year after a year of falls, according to analysis by Standard Media Index (SMI).

The forecasts also show a strong bounce in ad spend in 2020.

Jane Ractliffe, SMI managing director, says final August results to be released next week will show another negative growth month, making that 12 in a row.

"So now the only question is when will the bounce-back begin, and our forecasts indicate that will happen before year-end and possibly as soon as October," Ractliffe says.

"The recent tax cuts, an expected cut in interest rates and the fact that October 2018 was a month of weak demand (back 7.7% on October 2017), all combine with SMI’s own forecasts to deliver a month of higher advertising expenditure,’" she says.

smi forecast

SMI today released its first combined view of the Australian and New Zealand media agency advertising markets.

The value of advertising inventory sold in both countries totalled $A8.1 billion in the fianncial year to June and has grown by 19% or $A1.28 billion in the past ten years.

Ractliffe says the Australian and NZ media markets are similar.

So far this year both countries report lower advertising demand for the first eight months of this year, with Australia down 4.9% an NZ 0.5%.

In NZ, monthly ad spend fell for 12 consecutive months but has now moved back to growth in the past three months.

"It’s clear in our empirical data that extended periods of lower advertising demand are followed by strong bounces as business confidence recovers and pent up demand leads to bursts of above-average advertising expenditure," Ractliffe says.

"If you look at SMI’s global ad spend data from 2010, in that year the US advertising market grew by 18%, the UK market by 10%, the NZ market by 11% and the Australian market by 17% as they all bounced back from periods of low demand."

SMI also released its first product aategory ad spend forecasts.

Categories spending more than 30% of their media budgets in Q4 – Retail, Home Furnishings, Clothing/Fashion Accessories and Consumer Electronics – were all likely to grow their final quarter ad spend against the same period last year. 

SMI’s forecasts show that in the year to December, retail ad spend will grow 1.4%, home furnishing/appliances ad spend will lift 0.7%; ad spend from the clothing/fashion accessories advertisers will be up 1.5% and the value of ad investment by consumer electronics advertisers will be up 3.8%. 

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