The Weekend Mumbo: Hidden behind the numbers, the human story’s pretty grim
Deep in reporting season for corporate Australia, it’s easy to drown in the numbers. After all, every company wants to win and will scour the data to find – and sell – that victory.
But not far below the surface is a very real, very human story.
People are finding it tough. They’re cutting costs at home and at work, and that’s hitting media and marketing companies.
Seven West Media and Southern Cross Austereo reported their results this week, painting a clear picture of the environment we’re all trading in. An environment made up of millions of households and businesses all dealing with a cost of living crisis, facing soaring prices and a battle to make ends meet.
And this is where it gets personal.
SCA’s new CEO, John Kelly
Southern Cross Austereo delivered a $77.2 million profit in FY23. That’s down 12.2%. This business is changing, with the television component underperforming, and a major investment in (and reliance on) the growth of the digital audio platform LiSTNR. While traditional broadcast radio is still strong (like traditional TV), the audience is progressively looking beyond the program schedule to consume the content they want whenever and wherever they wish. The pressure is on LiSTNR to continue that growth, which is no mean feat considering the trading environment.
So it makes sense that Southern Cross Austereo is conducting a Strategic Cost Review (their caps, not mine). We talk about human stories, and there’s no more human story than a Strategic Cost Review. Because usually that means jobs.
SCA is looking to cut $5-7 million in costs this financial year. That’s a relatively aggressive target for just over ten months. SCA Chief Executive John Kelly told Mumbrella this week that the search for savings will include every department: TV, radio, podcasts, technology, corporate. The lot. He wants to have a “more efficient cost base moving forward.”
It makes sense: investors want to see costs kept under control, particularly when profit is sliding. But it’s tough for employees at a company to hear that costs will be cut. It’s human nature to worry about your own position. To worry about your own ability to pay the rent or the mortgage or put food on the table (when all of these things are getting more expensive too).
And it’s worth a peek at the outlook in SCA’s results. The company is predicting the next six months to remain a short, inconsistent trading environment. Then, in the first half of next year, things are hopefully going to improve. Plenty of businesses would be hoping that’s right.
In the meantime, the tough ad market continues. Seven West Media showed us that as well. Profit has been slashed by more than $60 million in FY23. The company says it will “continue to look for ways to drive efficiency into the business.” There’s that focus on efficiency again. When the ability to make more money is constrained by the market, the search for savings really heats up.
And it puts more pressure on the creative executions as well. Not just to do more with less, as each new channel has its own creative requirements, but the fundamental challenge of finding ways to sell a product when the target market has less money to spend.
I know this is a very businessy Weekend Mumbo, but bear with me – because away from the media companies, the rest of this extraordinary story is being told through the results of other Aussie companies. Because this is where we see what everyday Australians are really doing, the way our behaviour is changing, and the way we’re coping with a cost of living crisis. These results show real-life trends.
Look at Inghams group, the country’s largest poultry producer. This week it posted an increase in net profit to more than $60 million. Why? Because families are eating more chicken. It’s cheaper.
Then check out Super Retail Group, which owns Rebel, BCF and SuperCheap Auto. The best performing category for the group was auto maintenance. Why? Perhaps because cash-strapped households are doing it themselves. Again, it’s cheaper. And definitely more affordable than buying a new car altogether.
Treasury Wine Estates is worth a mention too. It reported a 5.4% drop in earnings across the arm of the business that sells cheaper drops – labels like Wolf Blass and Pepperjack. In a cost of living crisis, stretched family budgets are trimmed and the non-essentials are cut. It seems that includes the odd glass of wine.
And maybe that’s why banks (like NAB this week) are reporting only a relatively small number of customers falling behind in their home loan repayments. Because when it all boils down to it, the priorities are simple: keep a roof over your head, keep the lights on, and keep food in your belly. Eat the cheaper meat, cut back on the wine, change the oil in the car yourself.
This is the environment businesses are operating in. It’s tough out there.
But it’s not all bad news, and this is where marketers can see the opportunities. Those same results from Treasury showed a 14.2% increase in earnings for the Penfolds arm of the business. What’s this tell us? There’s a section of the community much more immune to the cost of living pressures, and they’re still spending.
That group is still travelling too, it seems. We heard from Tripadvisor this week that 95% of travellers would cut all non-essential spend to allow them to get away.
So there’s a little bit of positivity. And there’s still more too.
Because the talk in the office this week wasn’t actually about grim corporate results, or cost-cutting measures, or the cost of living. It was about something much more exciting, much more hopeful, much more inspiring.
The Matildas might have lost their semi-final against England, but their spectacular run during the FIFA Women’s World Cup has ignited a passion for women’s sport that should burn well beyond the tournament.
And the brands who backed the team and the World Cup – think Commonwealth Bank, Xero, Rexona, and of course rights holders Optus and Seven – look like visionaries. Good on them for getting on board. They deserve every bit of success that flows from it.
We started out talking about human stories hiding behind the numbers, so we’ll finish there too.
7.13 million: the number of Australians who witnessed the Matildas taking on England.
7.13 million people struck by the skill, the passion, and the sportsmanship of the World Cup.
7.13 million people reminded that while it’s tough out there right now, there are still some brilliant stories being told.
Rest of the week
The Mumbrella Travel Summit and Awards have wrapped up this week, and with a packed house, it’s a clear sign that the industry is getting back on its feet and even witnessing higher consumer demand than before COVID.
A huge congratulations to all of the award winners.
In other news, global advertising industry executive Mat Baxter has announced his return to Australia where he will continue to run the global operations of Huge from here. The agency’s local managing director Ben Skelsey told us that Mat is returning “for family reasons” and, for himself, it will be business as usual.
As for client moves, Priceline has parted ways with its media agency of nine years, PHD, and selected Initiative as the new partner. CHEP Network has won the media and creative accounts of CitiPower, Powercor, and United Energy, and Specsavers’ creative account went to TBWA\Melbourne.
While you wait for the third-place match between the Matildas and Sweden, you can read up on Mumbrella’s deputy editor Nathan Jolly’s features on how Optus Sport’s football obsession turned into streaming gold and whether now is the tipping point for women’s sport – or a World Cup-sized outlier on the website.
Enjoy your weekend.
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