Unravelling the Complexities of the Australian Retail Market’s Digital Ad Spend

The broad retail category is undoubtedly one of the most influential for a host of major Australian media, but within this vast landscape are numerous micro-economies each with their own peculiarities. And that’s especially evident when it comes to their investment in digital advertising.

In recognition of the difficulties in understanding the Australian market, last year Standard Media Index’s media agency partners agreed to split what was then SMI’s largest category into five more discrete groupings: food/alcoholic retailers, home furnishing/appliances, specialty retail (retailers of their own brands), QSRs and we redefined retail more finely to be sellers of a variety of products (mostly department and hardware stores, chemists etc).

This decision has added significantly to the level of market knowledge on retail spending as a whole.

For example, in the most recent month of August total Australian agency spend was up 3.3% YOY even before late digital bookings were received.

But that higher demand came despite lower spending from SMI’s five retail-related categories, with their combined total bookings down 2.8%. However, that top-line figure masked large demand differences among the five with retail bookings growing 13.4% YOY while spending for the four other categories declined by amounts ranging between 4.3% and 15.5% .

And the level of complexity grows further when these categories’ ad spend is analysed by digital sector.

For example the retail category is the only one of the five to spend the majority of its digital budget on search, although that total is declining as it moves more dollars to social networking.

In contrast, food/alcoholic retailers are delivering huge growth to the search sector (more than doubling that spend in the last calendar year) while continuing to grow their investment in content sites and so far reporting relatively modest increases in spending onto social networks.

And it’s restaurants (mostly QSRs) that are the only retail-related category to deliver the majority of its bookings to the exchanges, or programmatic, market with that total quadrupling in the past calendar year (while at the same time massively reducing their television budgets). At the same time they’ve also doubled their spending onto digital’s mobile vendors while maintaining expenditure onto content sites.

But the most similar Australian digital spending patterns are evident among the specialty retail and home furnishing/appliances categories, with each of them investing the bulk of their digital budgets in content sites followed by search and then exchanges.

This data is another example of SMI continuing to add to the market’s knowledge base by providing actual ad spend data to better inform media sales teams, marketers and the industry’s data scientists.