Analysts: Election may give minor boost to lacklustre ad market

Prime Minister Julia Gillard.

Media analysts are tipping the September federal election will provide a boost for Australia’s lacklustre advertising market.

However, some analysts are sceptical about whether political party spending will compensate for revenue lost from government spending during the mandated blackout on Commonwealth advertising.

“Political party spending is not actually that large,” said Fusion Strategy’s Steve Allen.

“I mean it seems like is it, because we all have to go vote. But they are not spending what Mars spends or Nestlé spends,” he said.

“It is a very concentrated pattern and so it seems large. But really they are spending between $5m and $10m – these days that is a modest national advertiser.”

In the last financial year the Australian Commonwealth Government spent a total of  $120m on advertising.

CitiResearch Media Analyst Justin Diddams said historically the overall boost to the ad market, especially given the extended period between now and the election.

“We think the election can be supportive of the ad market,” said Diddams.

“Historically election spending adds around 1% to the ad market in an election year,” he said.

“On the basis that we’ve got around seven months to the election, you would assume that drawn out period would draw more advertising and more promotion by government.”

Steve Allen said he believed there would be a surge in government spending in the run up to the official election campaign.

“The current government will find an incredible array of campaigns that they will need to tell people about this year – they might never have thought of these campaigns before, but suddenly we need to know about them now,” he said.

According to Fusion Strategy, a large portion of election spending will also come from various interest groups, from both the left and the right of politics.

“The industry will be better off. Especially, when you add in overall government spending and then there will be at least twice the amount of money spent by other political groups,” said Allen.

Another area to watch is where government and the political parties chose to deploy their spend.

“Whether it gets deployed in above-the-line advertising or they continue to use the 24-hour news cycle to keep perpetuating stories and fill the pages of newspapers with their stories… and get a lot of (free) editorial, that is where the question mark is,” said Diddams.

The political parties have appointed media agencies Starcom MediaVest for the Coalition and Ikon Communications for Labor.

While television is still expected to absorb a significant portion of ad spending another area to watch in the 2013 federal election will be the growth in digital spending.

In last year’s US presidential election the two parties spent more than US$78m on online advertising. This is up from an estimated US$20m in 2008.

CitiResearch said it did not believe the Australian market would see similar growth in digital spending.

“Is the Australian online environment sophisticated enough to really gain enough traction for politicians in that environment? Arguably, I’d say no,” said Diddams.

“We think Australia in terms of our online evolution is three years behind where the US is. It is debatable whether online is going to get sufficient traction. That being said, we still expect more money to be spent – and that’s because that is where consumers are spending time.”

“The money will follow the consumer.”

Nic Christensen


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