2018 Market in Review

By David Turner (Head of Investment)

2018 has been a year of change. Mergers declined and approved, sales and content partnerships announced, and expenditure into star performing channels such as digital and outdoor finally beginning to slow. As the year comes to a close, we take a quick look at the bigger market impacts we’ve seen over the last twelve months.

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Market Demand

YTD 2018 has seen agency expenditure decline by -4.7% YOY (Jan-Oct SMI). However, before any conclusions can be made, it is extremely important that we delve deeper to truly understand these numbers—and that we remember that the year we saw in 2017 was a benchmark, led by one of New Zealand’s biggest sporting events, the British and Irish Lions Tour. Last year also saw the general election drive significant revenue into the market, which benefited almost all platforms, especially TV, Radio, Outdoor and Digital.

Adding to the 2018 numbers is the continued increase in programmatic revenue. Most agency groups have been trading this way for a number of years now, which has not only improved digital efficiencies, but has also been integral to ensuring budgets are no longer spent in areas that may have driven high levels of wastage.

Some of the biggest change in 2018 has been in the outdoor market. Outdoor has experienced extreme growth over the last two years, with this driven by its digital transformation, which not only allowed greater flexibility, but also opened up the channel to categories that have previously been unable to fully utilise outdoor (such as retail). That growth has now slowed, sitting at -0.5% in 2018, though this represents a truer level in which they will look to operate, as the medium under-indexed across a number of categories. Outdoor will not see this level of growth again for some time.

2019 will see a mixed bag across the market. We will see a similar trend across key media and predict expenditure into the total media market will likely again drop back slightly YOY. We will, however, be keeping a very close eye on the performance of the economy, business/consumer confidence and international markets such as Australia, China, the USA and Europe.

Mergers and Partnerships

2018 has been the year of BIG NEWS – primarily involving the OOH market – which looks to offer positive benefits for agencies, clients and consumers.

JCDecaux will be a very exciting entrant and we cannot wait to see the changes they will bring to market. Being the world’s largest outdoor company, they already have a lot of exciting tech on-hand and are keen to progress an automated buying platform for outdoor in the local market.

oOh! and Adshel are a great coming together, expanding the offering of both of these companies and allowing some pretty exciting targeting across a solid and extensive network, as well as the ability to use them in some very clever ways (using digital, static, video, large format and in-mall activations). This will present the opportunity to target a true path to purchase, from street to mall and more.

Though it’s early days for the MediaWorks and QMS partnership, this looks to be an extremely positive one for both companies (and also their customers). It allows MediaWorks to truly delve deeper into their customers businesses and offers greater scale. As an organisation, they will also gain better insights across the wider media market, allowing a better understanding of customers issues/concerns and challenges.

And finally, NZME and Stuff eventually decided enough was enough and accepted the Commerce Commission’s decision, with the only winners from this battle being the lawyers. Both have subsequently gone on to develop partnerships with other media companies (NZME and GO Media, Stuff and Bauer) which will assist in strengthening both their content offering and inventory.

One thing is for sure, the market has gone through some significant change this year, and we will only see this continue into 2019.

Date: December 14, 2018