Digital and outdoor shine in record first quarter

In a pleasing start to the year for the Australian advertising market, agency demand for media has reached record-high levels in the first quarter of 2015. SMI recently reported a vibrant 4.3% growth for the total market in the first three months of year and, in a sign that advertisers are spending up bigger than ever, total agency spend across the media landscape rose above $1.7 billion for the first time since we began collecting spend data in 2007.

While the newspaper and magazine sector continue to face significant structural headwinds, all other media types have reported a buoyant start to 2015. In fact, if we exclude the declines in +-print media, the total market would have risen $100 million higher year-on-year for the March quarter. Looking at SMI’s data, here’s an analysis for the rest of the market in the first quarter:

The first quarter saw many bright spots across the media landscape. Metropolitan free-to-air TV remains on top when it comes to total spend, driving up growth in each of its top five advertiser categories (automotive; food, produce & dairy; entertainment; and leisure and retail) by a combined $22 million for the quarter.

• TV more broadly continues to maintain a strong position in its share of the agency wallet, taking 46.7% of all bookings, compared to 47.4% in Q1 2014 The sector’s dominance is bolstered by automotive advertisers (who are by far the largest advertiser category in the market), which represented 50% of spend in the total TV market across this past quarter.
• Despite marketers’ reliance on TV media, the lion’s share of growth in 2015 so far has been delivered by both outdoor and digital media. These sectors put in an impressive performance during the quarter: digital media began taking more than 20 cents in every agency dollar spent, while outdoor media cemented its place as the third highest channel (behind TV and digital), taking 10.5% of all agency bookings. Together, both channels have surged over 15% higher than the March quarter in 2014, lifting their total spend by a combined $731 million in Q1.
• SMI’s first quarter numbers seem to support the theory that the “digitisation” of a large volume of outdoor inventory, particularly video and interactive opportunities, is attracting significant advertiser attention and fast inching up to digital as a significant player in the media mix. The ability to effectively measure digital out of home campaigns, deliver relevant messaging to consumers outside of their lounge rooms, and the opportunity to deliver more engaging creative in full motion video, is likely to see sustained growth in the out of home arena for the remainder of the year and into 2016.

As always, the strength of the agency ad market continues to be inexorably linked to wider market conditions – and despite an economic backdrop of Federal Budget uncertainty, a free fall in the price of iron ore, and stubbornly low growth in consumer spending – these recent signs of the health in the Australian agency market is extremely heartening news following two successive quarters of decline.