Ad spend dragged back 5.3% in 2019 calendar year, ending a seven-year run of growth

Australia’s media agency-funded ad market has ended a seven-year run of consecutive growth, finishing a tough calendar year 5.3% back on 2018 at $6.8bn.

Standard Media Index (SMI) said an “unexpectedly difficult” December quarter exacerbated the result, although noted calendar year 2019 was being compared to the previous year’s record result.

Retail spend fell 5.2% in the calendar year

Auto dropped 7.6%, retail 5.2%, and domestic banks 11.6% compared to the previous year’s Royal Commission-related spend. A couple of bright spots included insurance rising 12.5% to become the market’s third-largest category, and restaurants upping investment by 7.7%.

Demand worsened throughout the year, with bookings falling 6.4% in the last six months of the year compared to 4.2% in the first half. In the December quarter, spend was back 7.9%, and 6.9% in the month of December itself.

SMI has been less optimistic about future growth after projected October growth didn’t eventuate and November marked the 15th consecutive month of decline for ad spend, but AU/NZ managing director Jane Ractliffe said that, despite the calendar year result, forward booking data offers some hope.

“We can see that for the month of February the value of Australian agency expenditure is already at 79% of the total achieved in February 2018 (when digital media bookings are removed as they are often paid retrospectively), and that data was extracted from the payment system on January 30,” Ractliffe said.

Forward booking data shows the future value of confirmed ad spend.

Outdoor and cinema were both up for the month of December (4.3% and 19.5% respectively), but all major media reported a decline in both December quarter and calendar year bookings, capping off a particularly challenging year.

In contrast, the New Zealand market experienced growth in the calendar year, up 0.5% to NZD$1.03bn thanks to the Rugby World Cup and local elections. Demand also continued to grow throughout the year, compared to Australia’s poor-performing second half.

“In NZ, the forwards for February are slightly lower at 74% of the value of last year’s February ad spend but their forwards for March are similar to Australia’s with the value of the market already 50% booked,” Ractliffe added.

Outdoor was the strongest-performing in New Zealand, up 12.1% to a record NZD$154m. Digital bookings remained flat, radio lifted 3.8% and cinema was up 8.3%. The elections drove up government category growth by 22.1%, utilities bookings grew 32.7% and airlines/ travel agencies had a 13.6% improvement.

SMI has also, for the first time, split ad spend of digital content publishers from the ‘long tail’ of digital websites. Larger digital publishers look good with this change, up 5.8% higher collectively compared to long-tail websites, which are down 35%. Overall in digital, bookings were back 0.9%.

Further changes include the ‘restaurant’ category now including three sub-categories, and ‘travel’ now including ocean cruises and river cruises as sub-categories. SMI now publishes monthly ad spend figures across 130 product categories.

Food delivery service ad spend. (Click to enlarge)

In the 2019 calendar year, restaurants was one of the fastest-growing categories, leading to the sub-categories to better analyse demand. Food delivery has been a key driver of this growth thanks to new market entrants and existing restaurants turning to advertising to promote their affiliation with food delivery services. Outdoor and TV have been the main formats to benefit from this new advertising.


Get the latest media and marketing industry news (and views) direct to your inbox.

Sign up to the free Mumbrella newsletter now.



Sign up to our free daily update to get the latest in media and marketing.