Australia’s advertising sector appears to have avoided the worst of the ongoing shockwaves of the global financial crisis, although the impact on ad spending was significantly more severe across main media in the second half of the financial year (January to June 2009) according to Nielsen’s Top Media Advertisers report for 08/09.
“While most overseas advertising markets were already in meltdown by mid 2008, the impact was not clearly evident in Australia until later in the year. When consumer and business confidence was declining in late November and exports /commodities trading were drying up, rapidly softening economic conditions led to more cutbacks in jobs, and for many organisations, forensic cutbacks in advertising activity,” said Peter Cornelius, Managing Director Media for The Nielsen Company Pacific.
Not surprisingly, main media ad spend activity reflected this spiralling demand trend, with the financial year finishing an estimated 6.2% behind the corresponding period in 07/08. However, the 08/09 financial year was really a tale of two halves. The first half (July – Dec ‘08) was down only 2.3% on the same period in 2007. The second half of the financial year (Jan -Jun ‘09) took the full brunt of the economic downturn with a decrease of almost 11% versus the same period in 2008. It is this ‘low’ base the industry will be watching very closely as media trading improves in line with the much anticipated future economic recovery.
Ad Spending in Australia's main media, FY 08/09 vs. FY 07/08
|FTA Television||Metro/Re Newspapers||Magazines||Radio||Cinema||Outdoor||Direct Mail||Online||% Diff YOY|
|Source: The Nielsen Company Australia ~ Top Media Advertisers Report Fiscal 08/09|
Major Advertising Categories Overview
The top 10 Major advertising categories account for 71 cents in every main media ad dollar invested and provide vital indicators on the health of the advertising and media markets.
This is particularly significant when reviewing retail, Australia’s largest category which accounted for more than 21percent share of media spending. The Government’s stimulus packages in early 2009 helped renew confidence among retailer advertisers who promoted heavily to encourage consumer sales. Remarkably, in this economic downturn, retail advertising recorded a minimal 1.1 percent decline YOY to $2 billion.
|08/09 Rank||Australia's Top 10 Ad Categories||AUD$M||YoY %|
|3||Entertainment & Leisure||759.4||-2.1%|
|Source: The Nielsen Company Pacific|
Australia’s Top Advertiser Groups / Advertisers Overview
The Top 25 advertisers accounted for 21 cents of every main media advertising dollar invested in the financial year. The sectors which were most representative of this elite group of advertisers were Retailers (5), FMCG (4), Motor Vehicles (4), Governments (4) and Telecommunications (2).
The country’s dominant media advertiser group was Wesfarmers Limited, incorporating some of Australia’s foremost retail chains including Coles Supermarkets, Target, Kmart, Bunning’s Hardware, Officeworks and Liquorland. The group finished the financial year with an estimated $220 million spend, just 2.1percent behind 07/08.
Harvey Holdings was the 2nd ranked top Advertiser and performed strongly in what was considered a difficult year for Retailing and advertising generally. With a 4.6 percent increase to an estimated $135 million spend, the group lifted 2 spots from 4th position last year. Also stepping up two positions was 3rd ranked Woolworths Limited, substantially increasing their main media advertising presence by 8.7 percent to $134 million.
|Australia's Top 10 Advertisers /|
|Wesfarmers Limited||220.2||- 2.1|
|Harvey Holdings Ltd||135.2||4.6|
|Government Commonwealth||133.6||- 28.7|
|Telstra Corp Limited||129.7||- 22.8|
|Nestle Australia/L'Oreal||109.1||- 10.6|
|Government NSW||84.8||- 14.5|
|Toyota Motor Corporation||82.3||0.2|
Will there be an early Australian advertising recovery?
At the time of writing in September 2009, the financial analysts’ debate continues as to whether Australia ever was officially in recession, although strong retail figures suggest that this may have saved the economy from tipping into one. However, Australia’s economy appears to have begun to rebound with greater speed and resilience than most overseas markets. There remains a cautious attitude among media and marketing sectors about a significant recovery before the end of 2009. However, as our fiscal year ad spend estimates reflect, and taking into account a soft first six months of 2009, advertising activity may need time to recover and rise into the black.
Certainly, our studies support the theory that those who advertised through the tough times have maintained their competitive advantage as the economic climate improves. Marketing dollars spent during a downturn have less competition for eyeballs, so those who cutback may face even bigger challenges winning back consumers’ hearts and minds.