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Record retail slump drags Australian ad spend down

A record slump in retail ad spending has seen Australian advertising spending suffer an unexpected fall this month, the Standard Media Index (SMI) has found.

The data shows the market has fallen 8.1% to $679m.

SMI local managing director, Jane Schulze: “A record year on year decline”

While yet-to-be-reported digital bookings are expected to correct the decline to 3%, the current period is the first time programmatic bookings have slumped.

Retail ad spending fell 20% from last year’s levels, the highest fall of any category since data began being recorded in 2007. Most of the fall was accounted for by the food, alcohol and retail sector.

Newspapers, magazines and digital were the big losers with 31%, 28.1% and 21% falls respectively, while television declined 2.5% and outdoor slipped 1.6%.  Radio was the bright spot with an 8.2% gain.

SMI’s Australia and New Zealand managing director Jane Schulze observed it was highly unusual for the retail sector’s advertising expenditure to fall at this time of year, as more than a third of all retail advertising historically occurs in the fourth quarter.

“Retail category ad spend has fallen 20% from October 2016 levels, which represents a record year-on-year decline in the 10 years of SMI data reporting. Interestingly, industry feedback suggests retailers are stockpiling their marketing budgets in preparation for the imminent launch of Amazon in Australia,’’ Schulze said.

Political advertising, mainly driven by the marriage equality and union campaigns drove the market with the government category reporting 69% growth, $11.5 million higher than the previous year, while the Industry Association/Unions category increased $2.69 million, 120% up on last year.

“Standard Media Index reported last month that the Government and Industry Association/Unions categories spent at least $10 million on the Same Sex Marriage debate, and this month the additional bookings from those categories is $14.2 million which suggests more than $24 million was spent on advertising related to the Same Sex Marriage in the past two months,’’ observed Schulze.

“But while the Industry Associations focused their ad spend on the Television and Newspaper media – their share of that category was 76% and then 9.1% respectively – the Government category spread its funds more broadly with TV taking 34% of spend followed by Digital, Radio and Newspapers with 22.6%, 16.5% and 15.4% each.’’

SMI warns the month’s poor figure coupled with lower October bookings has weakened the market’s position for the financial year, with total agency bookings now down 3.7% on the same four months last year.

Calendar year-to-date bookings are have fallen 1.9% but if government category expenditure was removed to exclude last year’s federal election spending, the market is only down 0.6%.

SMI AU October 2017 Media Data.

SMI October 2016 Media Agency Ad Spend Trends (Interim Digital Result)

Competitive Media Type

% Change

Television

-1.6%

Digital (ex Programmatic)

-27.2%

Television Total

-2.5%

Digital (Unaligned to traditional media)

-21.5%

Outdoor Total

-1.6%

Radio

8.2%

Digital (ex Programmatic)

41.5%

Radio Total

9.4%

Newspapers

-30.8%

Digital (ex Programmatic)

-31.4%

Newspapers Total

-31.0%

Magazines

-29.8%

Digital (ex Programmatic)

-18.3%

Magazines Total

-28.1%

Cinema Total

20.9%

Other Total

5.0%

Grand Total

-8.1%

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