Lavish Christmas parties, share buy-backs, and millions of dollars from Google and Meta to invest in newsrooms: it’s as if the pandemic never happened to Australia’s media sector.
But nearly three years on from one of the most significant advertising market downturns the industry has ever seen, executives are nervous again. And they have every reason to be.
Zuck-bucks and Google dollars won’t be enough to prop up the media sector with another advertising downturn.Credit:
In early November, before Australia’s largest media companies appeared in front of shareholders at their annual meetings, this masthead wrote that local media buyers were feeling bullish despite inflation and interest rate rises.
It’s a view that was shared by a number of high-profile fund managers who, on a panel with this reporter in late November, said they were confident that Australia would not feel the effects of a global recession.
Media executives are largely silent on the topic. In fact, at their annual general meetings (AGMs), they were reluctant to provide detailed earnings guidance for the full year. This was because it was already clear that advertisers were starting to reduce the amount of money they spend which made forecasting difficult.
It isn’t looking good. Advertising dollars – at least for traditional media – are falling rapidly across the sector. While media buyers said they were anticipating single-digit growth next year, there are early signs of a high single-digit decline.
Data released this week by the Standard Media Index (SMI) paints an ugly picture. SMI tracks the advertising dollars that come through most of Australia’s media buying agencies. It said bookings in metropolitan television fell 9.4 percent in November (UBS then said on Friday it was forecasting a 4.5 percent decline for metro TV for the full financial year). Newspaper ad bookings fell 26.3 percent year-on-year, and radio fell 7.1 percent, according to the data.
The categories contributing to the quick decline are government, in-home entertainment, and technology.
SMI doesn’t track all advertising spending, but it is indicative of broader trends. If the market keeps heading downward, it will have a knock-on effect and will underpin key strategic decisions for executives as they head into the new calendar year.
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