SMI agency ad spend figures: outdoor outpaces digital growth for FY 2016/2017

Standard Media Index chief executive Jane Schulze says “New Zealand is probably the most buoyant advertising market” compared to surveys conducted across Australia, Europe, the United Kingdom and Australia.

This statement comes after agency ad spend data for the 2016/2017 financial year, showing an 8.2 percent increase in overall spend across the major media channels.

Despite again putting in a strong performance by posting a figure of 20.8 percent growth, digital was not the fastest growing channel in the latest round of results.*

This accolade goes to the outdoor, which inflated by 24.9 percent year-on-year.

Schulze says the slow down in digital growth is to be expected given the explosion of the channel over the last few years.

“You can only grow at that rate before you eventually start to plateau,” she says.

This argument could certainly also be applied to outdoor industry, which is enjoying rapid growth on account of wide-scale digitisation of inventory across the country. There’s only so much inventory that can be digitised before this channel also plateaus into a new normal, which is looking like a very profitable place right now.   

Schulze says another reason for the slowing of digital growth is “due to a large fall” in spend on the digital search category.

She says this is in line with international trends, with many marketers questioning how much they should be attributing to search in the media mix.

“Maybe that will turn around again in the coming year,” Schulze says.

 The only channel to suffer a significant drop was the newspaper category, which slipped by 6.8 percent to $64 million for the last financial year.

Meanwhile, the other major print category—magazines–remained steady, posting a small 0.2 percent increase to reach $32 million.

While not necessarily good news, these results will be welcomed by the local market which would’ve been concerned by the recent ad spend figures out of Australia.

At the end of July, SMI figures revealed that newspaper ad spend had reduced by AU$100 million year-on-year while magazines plummeted by AU$29 million (18 and 16 percent respectively). 

Schulze credits the relative stability of the New Zealand market to the success of local owners in continuing to remind advertisers of how valuable magazines and newspapers can be to the overall media mix.

“The local owners have done an amazing job of holding the line,” she says.

This observation also extends to the local television market, which slipped by 1 percent but still posted $412 million in overall spend.

Schulze also points out that while television might have dipped year-on-year, the channel did post a very strong June quarter, largely due to the Lions tour.

“Advertisers still flock to the television whenever there’s a big event,” she says.       

Election spike on the cards?

With New Zealand quickly hurtling toward what is shaping up to be one of the most eventful elections in recent memory, Schulze expects there to be another ad spend spike in the coming quarter.

Last year during the Australian election, she says there was AU$19 million increase in advertising spend during that quarter of the financial year.

“This was due to government spending, trade unions, interest groups and brands interested in tapping into the hype.”

Schulze says she wouldn’t be surprised at all if something similar happened on this side of the ditch over the next quarter.   

*Note: SMI figures only take into account agency ad spend. A significant proportion of digital spend is made direct from publishers, such as Google or Facebook.  

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