“Very hard not to grow” Guideline SMI predicts growth for Australian ad market in 2024

Guideline SMI growth - Jane Ratcliffe

A soft start to 2024 will shift with the market set for a strong second half.

Australia’s ad market is set for a year of growth, with the combination of state elections, the Olympic Games and the easing of supply chains predicted to contribute to a strong year, according to forecasts by Guideline SMI.

Jane Ractliffe, the APAC managing director of Guideline SMI, predicts it would be “very hard not to grow” the market in 2024, noting that February forward pacings revealed total bookings were up 14% year-on-year for the month. 

Speaking as part of an exclusive Guideline SMI webinar in partnership with Mediaweek, Ractliffe said the strength of the local market in 2023, which, when adjusted to remove the inflated government spending due to the elections, dropped by just -0.9% or $72m would continue into 2024. 

“It will probably be a soft start to this year. We saw with the early January data that some of the negativity from 2023 has filtered into January, and I think it is probably going to be back year-on-year. But I think 2024 will pan out in a similar way to previous years, where the second half of the year is often the stronger half and is traditionally larger from a dollar investment perspective,” said Ractliffe. 

The presentation examined the potential growth areas in terms of sectors that are primed for growth this year, such as BVOD, retail media and programmatic, as well as the categories that have yet to return to pre-COVID levels of advertising spending, such as automotive and banking.  

“The growth rate for BVOD last year was 30.8%, as the linear TV market fell, but that digital spend still only represents 9% of total video ad spend in Australia, so there is a lot of growth to come, but it’s growing strongly, and we would expect that to continue,” said Ractliffe. 

“Video is gaining greater share overall within the Australian market, and digital video is now a $1.1billion market. So  it’s very, very significant.” 

“Retail media is a huge growth opportunity because, traditionally in Australia, retail media has occurred below the line, but that’s changing,” she said. 

Agency leaders are more pessimistic

However, while Ratcliffe painted a positive picture of the year ahead, media agency heavyweights were more critical. 

Kristiaan Kroon, chief investment officer of Omnicom Media Group, pointed to the low consumer confidence, the increase in costs and low discretionary spending by consumers as signs that things were not so rosy. 

“I think the market is tough, and it’ll be very tough through this first half. But there is reason for an upside in the second half,” said Kroon. 

“We’ll scrape growth, but the fundamental challenge for any business is their costs will rise faster than the market growth. That is the other side of this coin; we might achieve growth, but if your costs are going up 5% or 6%, that’s a significant issue. That means we will feel like it is a really tough market – almost recessionary –  for a number of months to come. I think we’ll see a turn in the final third with the Olympics, tax cuts, the Queensland election, etc. But the problem for everyone will be cost costs increasing faster than revenues increasing and that’s a tough wedge,” he said. 

GroupM’s chief investment officer Melissa Hey, agreed with Kroon and downplayed the impact of events such as the Olympics. 

“I don’t think in Australia that we’ll see the Olympics bring in a lot of new money,” said Hey. “I think it will be around brands, rejigging where they invest over that period. But, I don’t think it’s going to grow the overall pie in regards to the way Nine have set it up.”

“I wonder what the actual viewing on broadcasts will be and it will be a really interesting year to see whether there is a flip to video. The growth there will be really strong because we know the timezone suits that early morning, so I imagine we’ll see people watching it via video in the morning, and they will be listening to more of the radio as well because it’s on the commute. Don’t get me wrong, I think in primetime, the highlights will still have a major impact. But I just think the other areas now will have a bigger voice as well,” said Hey. 

However, Nunn Media Sydney managing director Chris Walton took a more optimistic approach to 2024’s outlook. “This year will be a tale of two halves, but those halves won’t be equal in length. So the first half, which will run until about April, will be soft. But I think certainly, from what we’re seeing from May onwards, there are a lot more reasons for optimism. I think we’ll net out the year with eight strong months and four weak months, and we’ll come out ahead with growth and momentum building as we head towards the end of the year.” 

“I believe there will be momentum and I think we’ll see growth between 5% and 10% this year,” added Walton. 

Top image: Jane Ratcliffe

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