Media's billion dollar bounceback
Welcome to a midweek edition of Unmade, written in Sydney during Advertising Week APAC.
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Today’s writing soundtrack: Listnr’s new Sound States ‘brown noise’ focus channel. Did it help stay focused on writing this? Maybe, although an imminent deadline also helps.
Monday saw the release of a big piece of date from Standard Media Index - Australian media agency spend in the last financial year.
SMI’s numbers deserve to be taken seriously. With so many walled gardens, SMI is one of the very few information sources where the information is based on real numbers, not best estimates.
SMI gets its data direct from all the major media agencies. And while it does not include advertising spend coming into media owners from brands at the smaller end of town who do not buy through media agencies, it offers an accurate picture of the market.
Before we look at the financial year just gone, there’s something else fascinating about that graph above. Take a look at FY20.
Advertising spend fell by more than a billion dollars from FY19 to FY20 - down from $8.3bn to $7.2bn. At the time that wasn’t a number that was discussed. That’s all the more dramatic when you consider that financial year ended in June 2020, little more than three months after Covid was declared a pandemic.
The bounceback in FY21 was relatively slight - unsurprising given the state Australia was in during those 12 months from July 2020 to June 2021 with lockdowns in the biggest states.
But what’s just as eyeopening is that after a billion dollar fall, we’ve just seen a billion dollar bounceback - up from $7.7bn of agency spend in FY21 to $8.8bn in FY22.
That’s up by $1.6bn on the trough of just two years before - a jump of 22%. Extraordinary. It was also ahead of where the market was pre-Covid.
The question now is whether the FY22 bounceback represents a peak. The US went into a technical recession on Friday (depending which economist you ask), Australian house prices are starting to crash (interest rates went up again yesterday), Treasurer Jim Chalmers gave a pretty bleak economic update last week and the cost of living is still blowing out. Yet contradictorily, the stock markets are back in growth and local employment numbers still look strong.
And according to SMI, brands are still spending locally. June was narrowly in growth (up 0.4%).There is, however, a however…
The bounceback is unevenly distributed.
Advertising is still pouring out of traditional media and into digital. SMI has seen a $900m shift towards digital since 2019 alone.
Standalone digital ad spend (think Google, Facebook and perhaps Tiktok) was up 10.9% for June, while almost every traditional medium was down.
Printed magazines - mainly Are Media these days - had (another) bad month, down by 7.5%. They failed to make up for it in digital, with spend there falling by 20%.
Agency advertising in newspapers was down 16.6% year on year (ouch), and TV spend was down by 6.2%.
Nonetheless, SMI strikes an optimistic note, with managing director Jane Ractliffe predicting the market is “arguably on track to hit $9 billion in size next year”. That’s a big call.
Unmade Index - the 700 ceiling
The Unmade Index has spent the first half of the week struggling to break back through the 700-point mark.
Yesterday saw the index, which covers Australia’s ASX-listed media and marketing companies nudge up to 690.5. The index remains 30% down on its 1000-point opening at the start of the year.
Almost time to let you enjoy your Wednesday.
Before we go, a reminder that soon Unmade will be offering advertising. We’re hiring a head of sales. It’s a great opportunity for somebody who wants to make a splash in the industry shop window, Please tell a friend.
Have a great day.