Credit: Marcus Woodbridge via Unsplash
The new year has opened with advertising spend weakening further in a market being more deliberate in its investment decisions.
Digital spend led the market, as defined by media agency bookings, down 6.5% in January, according to Guideline SMI data.
Total bookings for digital, the market’s largest medium with 48% of ad spend, are so far down 7.2%, although extra late programmatic bookings should improve that result.
Analysts see continuing caution in a market now faced with global disruption and the prospect of higher inflation fallout in Australia from war in the Middle East.
And brands appear to be moving budget to channels that offer immediate measurable results from broad, long term brand building.
Market analysts see the latest numbers as consistent with the trend over the last three months (down 5%).
"We are cautiously optimistic on 2026 ad spend, given positive business confidence, but note short visibility and near-term rate hikes," Macquarie analysts said in a note to clients.
Ben Willee, executive director - media and data at Spinach, said the headline numbers are sobering.
“January feels like a market that has checked its bank balance and decided to sit very still,” he said.
“With spend down and confidence fragile, brands are retreating into caution just when share of voice is getting cheaper.
“We are living through the most tumultuous period advertising has ever faced. Platforms are multiplying, metrics are arguing with each other and every second headline predicts either the end of creativity or the end of civilisation.
“It is hardly surprising that many marketers feel like they are trying to assemble flat pack furniture without the instructions.
“The good news is that while the environment changes quickly, human behaviour does not. People still buy from brands they remember and trust. Consumer confidence will recover, and when it does, advertiser confidence will follow close behind.
“In the meantime, this is a market rich with opportunity. Media is more negotiable, attention is still available, and competitive noise is softer than it looks. For smart and courageous advertisers, this is less a crisis and more opportunity than ever.”
Amy Carr, general manager – growth, Yango, said the headline figure masks a significant tactical flight to performance – brands moving their budgets from broad, long term brand building toward channels that offer immediate measurable results.
“There are positive signs in the growth of cinema (+37%) and outdoor (+1.3%) which indicate that this could be a period of tactical recalibration; advertisers aren't necessarily leaving the building, they’re just moving to the rooms where the lights are brightest.
“It's interesting to see the circular investment trend fuelled by the streamers, increasing their own advertising budgets to capture audience share in an increasingly competitive landscape. It will be interesting to see what impact this has across the next quarter.”
Steve Allen at Pearman Media said January looks much like a year ago when it came in at -7.2%. So, -6.3% isn’t quite as bad and about what was expected.
“But the make-up was quite varied. Radio the big variable loser, followed by TV.
“Forward pacing’s more favourable, especially February.
“Added to which, we expect this 2026 year to be lumpy, uneven, unpredictable.”
The War on Iran only exacerbates this.
Australia is somewhat shielded from this conflict but the disruption to trade and tourism will have a knock-on effect.
“This will make the 2026 year even more uneven,” said Allen.
“In this case fortunately, our trade with Asia will likely be the least disrupted.
“However, isolated we may be, consumer sentiment will wane and have an effect on spending and investing.
“The first immediate effect since last Saturday morning (our time), is the movement in crude oil futures prices. This will hit the bowsers within weeks (other than the temptation for profiteering).
“This will have a deteriorating effect on consumer confidence, budgeting and household spending, especially discretionary spending.
“Rock-and-roll times are unfortunately with us again.”
Tom Carlon, head of investment IAG at Initiative, said January substantiates the cautious sentiment felt across the industry by both partner and agency alike.
“With two quarters of negative growth and a flat Q2 CY25, it’s fair to say we are in the midst of a substantial correction, or in economic terms, recession,” Carlon said.
“Is this a correction from overzealous post COVID gains, reflective of the broader economic environment or, a sign of the outcomes-based scrutiny advertisers are more heavily subjected to? Maybe all the above.
“Whilst this may feel like a pessimistic outlook, as with all downturns, there will be an eventual upside – when that is for us media folk, is yet to remain. With wider macro economic factors still at play, anticipate we will continue to see this caution, at least until H2CY26.
“That does however provide opportunity for advertisers, particularly those in categories with a downward trend in spend, to unlock unfair SOV by not only leveraging the market from a value position, but also in challenging partners for new and innovative solutions to unlock funds – solutions that answer the outcomes based scrutiny may have a bigger seat at the table.”
Justin Ladmore, chief media officer & partner, Enigma, is thinking / hoping this soft start in January may simply be the final phase of correction before the next growth cycle begins.
“After a couple of tight years, this feels like a reset,” he said.
“Budgets are still shifting into channels that provide attention and results, like outdoor, streaming and retail media.
“If economic conditions steady even slightly, this leaner, more disciplined market could be well placed for a stronger second half of 2026. Always the optimist!”
Shai Luft co-founder and COO, Bench Media, said January’s decline shows confidence still isn’t fully back, but the detail reveals a market that’s evolving rather than retreating.
“Digital overall softened, down 9.3%, and Television fell double digits, signalling pressure on broad-reach, volume-based buying,” Luft said.
“Yet that’s only half the story. Digital Video grew 10.9%, Outdoor returned to growth, and Cinema surged 37%.
“Brands are pulling back from low-friction scale and concentrating investment into higher-attention, higher-impact environments. Even Retail lifted spend, while Travel and Government eased after last year’s elevated election activity.
“This isn’t a market collapsing; it’s one that is becoming more deliberate. Spend is consolidating around formats that command attention and deliver visibility in less cluttered spaces.
“In softer conditions, that discipline matters and the brands prepared to invest where attention is strongest will extract disproportionate value while others hesitate.”
Lee Stephens, executive chair, Meerkat, said January is a notoriously difficult bellwether to predict future activity for the year.
“The key to understanding January is looking for out of cycle budget movements,” he said.
“Digital TV is the clear standout with the trend likely to extend across 2026.
“Out-of-home, and DOOH in particular, is set for a strong year, particularly with a predicted 4th quarter surge with Sydney’s new western airport opening, and higher demand for the transit corridors feeding the new airport, from October 2026.
“Digital media down 7.2% is a particular concern, not only because it makes up 48% of all SMI reported revenues, but because it has been the driver of overall market growth for years. Small percentage shifts on such a large share of the pie are important.
“February and March figures are likely to be a more reliable indicator of the health of the media market for the rest of 2026.
Georga Payne, Chief Investment Officer, Woolworths at Dentsu, Carat, said 2026 will be the year of Sport, more than previous years, both local and global, and growing audiences across platforms will influence ad demand.
“We are already seeing this come through with latest Jan SMI results, whilst overall agency ad spend is back YoY, the growth in video continues, +11% YoY and publishers with sports content (ie Seven +38%, Nine +18%, Foxtel +18%) will fare better than others,” Payne said. “Netflix, Amazon also growing but off a smaller base.
“Outside of sport, there is opportunity for advertisers to access better value, even improved efficiencies in what is looking to be a continued short and volatile market. Advertisers have shifted ad spend despite audiences, as seen in Audio."
Looking at category spends, we saw +6% growth from retail influenced by “Supermarkets and online retailers, continued growth from Insurance and Automotive at +4% each, and over $16m spent from streamers (+21% YoY) in a saturated market competing for share of audience.
Wagering, another highly competitive category, saw growth of +10% and value in key sporting and tentpole environments.
“The government however is still lagging in ad spend, Travel is back as is Communications, Optus no doubt contributing to a quieter category.
“With a few financial results shared recently we can see SMI represents over 80% of total ad revenue for one major player. Understanding shifts in ad spend and how to offset any premiums will be key in delivering strongest outcomes for clients. Continued consolidation in market will allow for a cross-platform approach.”
Phil McDonald, CEO, BCM, said the latest data shows the usual ups and downs again.
“One channel up and another down and one category up and another down,” he said. “This isn’t going to stop anytime soon thanks to higher interest rates and continuing global uncertainty.
“It’s hard to predict what will happen next, but when we cut through the last six months of this data, what we are seeing is a complete transformation in how all of these channels are being planned and traded, in particular search, outdoor and streaming.
“A combination of short-term trading and test and learn is making it harder to predict yearly and quarterly trends.
“There are also changes in how these channels are working together as part of a total media plan and this is directly affecting spend levels across channel.
“How creative content is being produced and tailored for specific channels is also affecting spend levels by channel. For example, the spend in streaming channels will be heavily influenced around the capacity of agencies and clients to create and produce more dynamic, multi-variant content.
“Clients and agencies are also looking to leverage more first party data in partnership with media owners, and those who can facilitate providing this data flow will position themselves to attract higher investment levels.”
"Clients are still spending, but they are shortening decision cycles, looking for faster proof, and choosing partners who can move without a lot of internal drag," Lagos said.
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