Ad spend plummets by 40% in May: ‘Far worse than anything ever experienced’

The media agency-funded ad market fell 40.4% in May, a record decline of $234m, according to the latest Standard Media Index (SMI) figures.

The result puts the market on track to lose $700m worth of ad spend in just three months, from April to June. SMI AUNZ managing director Jane Ractliffe said the enormity of the decline is “far worse than anything ever experienced”.

Many brands within significant product categories pulled the vast majority of their advertising budgets in response to COVID-19’s impact on revenues, and all major media reported double-digit drops for the month, which follow April’s 35.3% ad spend slide.

Outdoor was down 71.1% and cinema 79%, driven by lockdown conditions, and radio also fell steeply, down by 55.8%. TV was back by 35.6%, newspapers by 46.1% despite record readership figures, magazines by 57.4%, and digital 26.4%.

May’s results. Source: SMI

“In May last year the travel category was the market’s fifth largest but this month its plummeted to 30th position after a shocking 92% fall in ad spend as the industry shut down,” Ractliffe explained.

“Similarly, the value of bookings from the live entertainment category slumped 95% and even the large automotive brand category reported a massive 62% fall in year-on-year bookings.”

COVID-19 versus the GFC. Source: SMI [Click to enlarge]

The market’s decline from January to May now sits at 21.3%, and for the financial year to date, the drop is 12.6%.

Ractliffe said the only bright spot is domestic banks, which lifted its investment as a category by 6.2%. While, when releasing April’s figures, the SMI said forward pacing data promised some improvement for June, Ractliffe updated the market and said July and August is now the period to look at.

The forward pacing data. Source: SMI [Click to enlarge]

“Given the difference in demand in May was more than 40 percentage points this shows the market is clearly regaining confidence.”

The MD noted that, while the local industry is struggling, it isn’t an anomaly on a global stage. The SMI’s first Canadian ad spend report “showed a year-on-year decline in ad spend of 50.1% in May while in the UK the fall was 41.6%, 38% in NZ and 32% in the US”.

“The sad reality is that all sophisticated media markets are feeling the full impact of the COVID pandemic and it’s devastating everywhere,” Ractliffe said.


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