2017 was another record year for agency advertising spend, with data released from Standard Media Index (SMI) showing $1.048 billion was spent on major media across the year in New Zealand.
Leading the way was TV, which continues to hold tight against the growing threat of digital, with one percent growth taking it to $389.6 million.
Digital followed, with 7.1 percent growth taking it to $338.9 million, ahead of outdoor’s $136.3 million—a total up 18.4 percent on 2016.
The 18.4 percent growth saw outdoor achieve the biggest jump in 2017, after its 22.2 percent growth in 2016.
SMI managing director for Australia and New Zealand Jane Ractliffe explains that momentum comes off the back of innovation in the industry. She says as long as outdoor companies continue to digitise their inventory, the category will continue to grow.
Continuing down the list of media, it’s then a significant drop to radio’s $83.1 million, which was up 2.1 percent on 2016. Meanwhile, newspapers and magazines are down 6.9 percent and 14.3 percent respectively.
Cinema’s 9.2 percent growth slowed the momentum it's previously showed as it grew 16.8 percent in 2016.
Also maturing is digital. The past few years have had industry poised to see digital overtake TV, however, with TV representing 37.2 percent of the media share compared to digital’s 32.2 percent, it still has a while to go.
Aiding TV’s retention of the top spot is the safe environment it provides brands, which digital is yet to meet.
“Marketers now are more concerned about brand safety issues,” Ractliffe says. “So it really comes down to whether or not digital media can provide enough safeguards to ensure there is no erosion in trust.”
That erosion came to light in the local market last year when Holden, Vodafone and Tourism New Zealand suspended their ads on YouTube due to concerns over ads appearing alongside racist, sexist or terrorist content.
At the time, Tourism New Zealand general manager of corporate affairs Deborah Gray told StopPress it would continue to serve up advertising on YouTube in the future under tighter brand safety exclusions.
Similarly, Ractliffe says digital advertising requires greater policing than that on TV because, on TV, the content against which the advertising sits is known.
“If digital can do that, then maybe there’s a chance it can overtake TV, but is still has a while to go.”
TV's decline slowed in 2017 and Ractliffe explains that 2016’s decline in spend on TV would have been the result of a spike in 2015 associated with the Rugby World Cup.
She says sports events such as the Rugby World Cup provide opportunities for sponsorship and therefore, they’re associated with increased advertising spend.
This year’s Commonwealth Games is set to see similar opportunities and already, the Olympic Winter Games have seen the New Zealand Olympic Committee roll-out a campaign called ‘Earn the Fern’, on social media and outdoor. APN Outdoor is an official partner of the committee.
Comparing New Zealand’s agency spend to that of Australia, our neighbours have bigger spend but local growth is higher. 2017 was also a record year across the ditch, with media agency spend up 0.7 percent to reach $7.11 billion.
Its spend trends display the spend on the digital channels of each category as well as the traditional offering and showed that while traditional TV was down 0.7 percent in 2017, TV’s digital offerings (excluding programmatic) was up 3.4 percent.
Spend was down 22.3 percent on newspapers and 20.8 percent on magazines, while digital (unaligned to traditional media) was up 12.3 percent.
Looking into the future, Ractliffe says the question for the New Zealand market is how the economy fares moving forward.
“You’ve just got a new government, there’s a lot of change – what impact does that have on advertiser sentiment?” she asks. “Are business still feeling confident and prepared to invest more in advertising to fuel their business growth?”
She says there is a strong correlation between advertising and confidence in the economy, and if confidence remains high then the advertising market will continue to grow. However, if something happens with the new government and that confidence falters, the expected course of events would be to see advertising start to fall away.
The new government and election saw government advertising spend up 9.9 percent last year, the third highest growth seen in the top 10 product categories.
Automotive brands achieved 11.9 percent growth and communications achieved 10.8 percent growth.
Meanwhile, airlines/travel agents saw the biggest drop, down 16.4 percent. Ractliffe says it was unusual to see the drop as it is usually one of the strongest categories in New Zealand given it’s a travel-orientated economy.