August 02, 2021

AFR: Marketers assess ad spending in Sydney market


Advertising buyers fear continued lockdown measures for the Greater Sydney region will spark a mini revenue crash as marketers will be forced to cancel spending if uncertainty persists.

Although the Sydney lockdown, and smaller Melbourne lockdown, have not yet led to a media revenue crash as witnessed in 2020, spending across the greater Sydney market is on a precipice as marketers start to consider cancellations should lockdown measures continue.

“There’s nervousness around our biggest market in NSW going through a protracted lockdown, but there isn’t the panic we had last year,” said the chief executive of media agency Starcom, Nick Keenan.

Referring to the last year’s national lockdown, which sent ad spending in April and May off a cliff, Mr Keenan said advertising billings had declined more than 40 per cent.

“That was a panic reaction,” he said.

Last year, Australia’s advertising market contracted by $1.1 billion as the COVID-19 pandemic crunched global spending in the West by $9.9 billion, reversing two years of growth across the US, UK, Australia, New Zealand and Canada.

In June this year, the Bondi COVID-19 cluster resulted in the lockdown of four local government areas. This was quickly extended on June 26 to all of Greater Sydney.

Rather than instantly cancelling advertising spending, brands reshuffled their campaign plans towards the end of the year.

“We’re not inhibited in spending our advertising spend at this stage. Yes, there’s a shuffling of the deck, and we’re navigating around it,” Mr Keenan said.

“But we’re increasingly looking closely at that market [Sydney] now. And it’s becoming apparent that changes are going to have to be made.”

Standard Media Index, which tracks advertising spending from media agencies but does not account for direct spending, says demand from advertisers appears unaffected by lockdowns.

SMI Australia and New Zealand managing director Jane Ractliffe said forward pacings data – which compares total confirmed ad spending for future months to that in the same month last year – was yet to show sign of reduced demand because of the lockdowns.

“I can confirm the total value of contracted August ad spend now equates to 83 per cent of last year’s August total, and that figure is up from the 44 per cent we reported for August in the interim June report we released two weeks ago,” she said.

Similarly, the value of September ad bookings had lifted to 38 per cent of last year’s total from 29 per cent two weeks ago.

“It does not yet seem as though the lockdown is detrimentally affecting future advertising demand,” Ms Ractliffe said.

Australia already lagged behind the US, UK, New Zealand and Canada in the first quarter of this year when it came to ad spend recovery, suggesting the current delta outbreaks will further hurt ad spend recovery.

However, Cummins and Partners chief media officer Paul Murphy said clients had been re-examining their spending in the Sydney market.

One client had been forced to reschedule an entire campaign because production on a television commercial was unable to proceed during the Sydney lockdown.

“That whole campaign has been cancelled and moved, because we can’t shoot anything,” he said.

Mr Keenan said confidence would depend on the outcome of the outbreak in NSW.

“If the strategy changes ... if it becomes that you can’t contain it and there’s just a focus on vaccinations, that changes it,” he said.

“That’s a scenario that I think economically we’re all looking at and advertisers are asking the question: what does that mean if suddenly NSW has been locked out from the rest of the country? Because long-term, that’s going to make it very difficult for marketers to work out the nuances between markets.”

Mr Keenan said the channel facing the threat of cancellation was “obvious”: outdoor billboards.

“If you’re in lockdown, you’re not on a highway looking at a billboard. You’re not driving past it, therefore an advertiser doesn’t want to be on there because it’s like the proverbial cutting down the tree in the forest and no one’s there to hear it. So no one’s going to see my ad,” he said.

“So that will turn to cancellation the longer that goes on ... so, no, [outdoor advertisers] won’t continue to shuffle around.”

Mr Murphy said outdoor had become more flexible following last year’s experience, and some brands, such as those in e-commerce, were looking to spend during lockdowns but in channels such as digital and TV.

“Channels like TV, although the audiences are diminishing, there’s more demand than ever, because people are going back to what they can trust works.
Whereas in the past, people were trying new things all the time to be a bit tricky,” he said.