23 Apr 2015
The Melbourne Spends and Trends conference, hosted by Standard Media Index (SMI) and Mumbrella with the support of ANZ BlueNotes, heard of a bullish start to the year for advertising, kept somewhat in check by mixed views on the outlook.
" It’s been a really aggressive period of growth for [search and social]."
Tristan Masters, SMI global director, analytics
Data from SMI showed record agency spend in the first quarter of 2015, surpassing the previous spike of 2011. Agency spend grew 4.3 per cent in the period to a record $A1.7 billion across all media.
There were standout numbers in search and social spend, which reported sustained growth and now makes up 32 per cent of all digital spending.
By platform, TV retained top spot, making up a stable 46.7 per cent of total agency demand as that market battles with the rise of numerous streaming services popping up around Australia.
SMI global director, analytics Tristan Masters said total growth was buoyed by spending on outdoor and digital advertising. Automotive advertising led both categories.
“Digital media has grown its top five categories 7.2 per cent," he said. “Outdoor has grown its top five 23 per cent. I think what we are seeing is the first stage of a digitisation of outdoor inventory."
Masters said there had been a pick-up in both search vendors (like Google) and social networking (mainly Facebook, with some action on Twitter and LinkedIn).
“You can see really, really aggressive growth in both of those corners of the market," he said. “Search vendors now take 25 cents in every dollar spent on digital. Social networking, off a slightly smaller base, is now taking 7.1 per cent of every digital dollar."
Masters said while search was not a big driver for large market spenders like automotive, it came into its own on things like travel, people booking online, good deals on airfares.
“It's been a really aggressive period of growth for [search and social]," he said. “Over $100 million advertising dollars spend on those two alone in the first quarter of 2015. It's absolutely phenomenal."
Masters said a recent increase in business confidence has helped lift the market to its record levels which was not a lock to be repeated in the second quarter.
“I would suspect it will be fairly choppy second and third quarter," he said. “But overall we are shooting for somewhere between three and four per cent growth in the market overall for 2015."
Not everyone was totally convinced by the rise of search and social. Fiat Chrysler marketing director Mark McCraith said while experimental digital spend was important, TV was still king.
“We're big fans of it," he said. “I think a lot of people in our organisation get excited about social media [but] we've never sold a car on social media."
“I just don't think [digital] has the grunt of TV. I might be a bit old-fashioned."
Mark Coad, CEO, PHD Australia agreed TV was not dead but said the way it is being used was changing dramatically.
“Something like 93 per cent of total viewing is still on the TV set," he said. “But what's changing is what's being watched on that. Netflix is early days but there are already indicators things are going to change and we know they're going to change."
Taking a broader look at the economy, ANZ's Riki Polygenis said low interest rates were gaining traction in Australia but powerful headwinds meant growth remained below-trend.
“I have to be honest and say the outlook is still quite mixed." she said. “I would love to tell you a really positive story about the consumer."
“It is possible that we will see a sudden drop in the household-savings ratio which means consumer spending would pick up more strongly. But at this point of time I think it's more likely consumer spending will grow in line with relatively subdued household income growth through the next couple of years or so."
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
23 Apr 2015
15 Apr 2015