Does Strong Government Spending Indicate Early 2016 Election?

Australia’s advertising market continues to deliver stronger-than-expected growth with Standard Media Index’s February 2016 data showing the market is already 2% larger than it was in the same month last year, having grown by $11.7 million to $582.0 million.

The industry’s strength is surprising given last February’s results were buoyed by significant advertising for the Cricket World Cup, which attracted large automotive and retail sponsors.

But this month the advertising market gained material support from an unexpected quarter – the bullish government sector.

SMI’s government category emerged as the sixth largest of all SMI’s 39 product categories this month, having delivered the largest dollar and percentage gain of any with its total soaring 57% year-on-year (representing a $9.14 million increase) to $25.2 million.

It’s by far the highest government expenditure ever recorded by SMI for the month of February in our ten years of data, with such levels of growth raising the question of whether the government has accelerated its advertising plans in preparation for an early election?

SMI’s Data Analytics Director Rob Russell has analysed previous government category spending in the lead up to a federal election, and found current spend levels are already above that seen ahead of the 2013 and 2010 elections.

Also, Rob’s graph (shown above) indicates that given the market’s current strength, government category ad spend is likely to track even higher than previously seen.

SMI’s category data shows the bulk of the higher government ad spending was directed to television where total government bookings lifted 57.9% YOY to $7.4 million. And SMI’s premium media sector data shows that 80% of that higher TV spending was directed to metropolitan TV.

But in percentage terms, the highest growth in government spending was seen in newspapers where the total lifted 97.8% to $5.4 million. And the government seems to be using newspapers to mostly target the regional markets, as SMI’s media sector data shows the regional press market scored the most government ad spend of any newspaper sector with the total doubling YOY.

Government ad spend on the digital media also grew in February but by a lesser 54% to $5.5 million, with the highest spend going to content sites, followed by exchanges, search and then social sites.

The metropolitan and regional radio markets also gained further government category support this month (bookings lifted 76% on metro radio to $1.78 million) and were also strong on regional radio.

And if these growth rates are maintained for the rest of the year, the Australian advertising market can be assured of achieving another record level of ad spend in CY2016.

One can only surmise that this is all leading towards an early election… What do you think?