Mid-Year Market Update

By David Turner (Head of Investment)

Six months have already passed us by so how’s the market shaping up? Put simply it’s been a shaky one with only three media experiencing growth in agency expenditure YTD. The largest and most impacted has been Television with Jan-May expenditure down -7% and digital wasn’t too far behind down -5.3%.

So what’s going on? There’s no one clear reason but a combination of factors both locally and internationally. If we look to our friends across the ditch where 2019 is forecast to be one of the softest in a number of years, linear TV investment is set to decline YOY and digital growth will remain in single figures (the first time since 2001). These numbers are reflective of Australia’s lower economic confidence, the struggling property market and low wage growth.

On this side of the Tasman we have a number of similarities as economic growth eased, business confidence slid and low wage growth is holding back consumer spending. Slower growth in China is also expected to impact exports in the short term and similar to Australia a stalled property market.

However there has been a glimmer of hope in May which was predominately driven by increased government spending which to date has seen significant YOY declines since May 2018 and forward pacing for June also shows slight growth.

Quarter 3 will bring further irregularities YOY and significant media expenditure is not forecast because all indicators are pointing towards the current economic situation remaining in play for some time yet. The Rugby World Cup at the end of the year will drive revenue into the ad market however only channels such as Radio, Outdoor and Digital are likely to experience growth and it’s unlikely the Television market (the largest) will see benefit from this competition due to the new broadcast method.

It’s forecast that the entire year will likely experience declines YOY, with the best case scenario being flat in 2019. It’s going to be a challenging year for our local media owners, however some continue to perform ahead of their counterparts and those who evolve, look to alternative sources of revenue and can truly help solve business problems will continue to benefit.

Date: July 15, 2019