April ad spend likely to decline 25 to 30%: SMI

The April ad spend market is on track to decline 25 to 30%, according to early figures from the Standard Media Index (SMI).

Despite the dramatic drop, SMI AUNZ managing director Jane Ractliffe said more dire predictions of a 50 to 60% plunge “will just not happen”.

In the past two weeks, media agencies have locked in $17m worth of ad spend, which Standard Media Index (SMI) says is a sign the impacts of COVID-19 on the market may not be as bleak as has been predicted.

SMI organised for a special ad data collection round to be conducted on Tuesday night to assess the impact of the pandemic on the market across the past fortnight, and said the results should provide some optimism for a market “awash with talk of campaign cancellations”.

Source: SMI. [Click to enlarge]

“The market is back, but suggestions of 50 or 60% declines will just not happen. Some media are tracking well from an agency perspective and many large product categories have continued to grow their media investment in April.

“Even if another ad was not bought in the whole of April, the worst case scenario for the AU market is a decline of 55% and 54% for NZ. But of course there’s a mass of paid ads that we’ll see in the next two weeks on our TVs, in our newspapers, on the radio, in magazines, outdoor and on our phones and tablets. So given the amount of ad revenue we’d usually see come through in the next two weeks, the likely decline at worst will be 25% to 30%.”

She added that ad revenue being stripped from small businesses will be the reason if any mediums experience drops of more than 50%.

“If media are seeing declines of more than 50%, that will be more due to the devastating impact of evaporating advertising from the small business sector given much of that part of our economy has closed,” Ractliffe explained.

“Media agency demand is not falling anywhere near the same level.”

According to IAB research, however, 86% of brands have changed their digital ad investment over the past month. More than half of brands reported that they are reviewing their advertising plans at least daily,  21% indicated they have paused all ad spend, and 57% have decreased some spend.

Of those who have decreased spend, 31% said they are still reviewing if they will be in a position to invest later.

“The Australian advertising market is in step with the global experience, with some brands simply not in a position to spend at the moment and the majority of other brands adjusting their spend, creative messaging and tactics to suit the current market,” IAB CEO Gai Le Roy said of the results.

The IAB’s research. [Click to enlarge]

A first look at early March data shows that the market is back 11%, excluding digital. Ractliffe said SMI would update the market again this week with interim March results.

“It’s never been more important to have the facts about how advertising demand is tracking and we want to ensure all our media and advertiser stakeholders continue to have an accurate view of the market on which to make important decisions in this unprecedented time,” she said.

Ractliffe said TV and newspapers seem to be the beneficiaries for changed media plans, with newspaper bookings already up 30% in March, and in the past two weeks growing 14% for April. The value of confirmed TV bookings in April is already 57% of that seen last April.

Despite this, both TV and print companies have taken drastic steps to cut costs, claiming evaporating ad revenue is leaving their businesses struggling to stay afloat. Seven, for example, has implemented 20% pay cuts for executives earning more than $200,000, and moved staff earning above $80,000, and not covered by an enterprise agreement, to four-day weeks. It also made the role of editor at Western Australian publication The Sunday Times redundant.

Ten will also move staff to nine-day fortnights from 20 April.

Nine has yet to announce big changes for its broadcasting division – although CEO Hugh Marks has signalled that staff have been asked to reduce leave balances and reduce the costs of teams – but has suspended some print sections.

News Corp – which this week published an open letter urging advertisers to work with the business – has also suspended the production of its 60 community titles, with chair Michael Miller admitting that “we don’t know how these businesses are going to fare in the longer term either”. He has said redundancies are “inevitable” but that the company has not been forced to turn to job cuts, yet. It has, however, introduced “significant” pay cuts for executives and cost reduction options for its workforce that include part time work, nine-day fortnights, and taking additional leave.


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