SMI figures: total agency spend just shy of $1 billion in 2016

SMI data shows total New Zealand ad spend for New Zealand accounted for $991 million between January and December in 2016.

This figure is up $48 million from 2015 and around $80 million from 2014, continuing a few years of growth for the industry.

Jane Schulze, SMI’s managing director of Australia and New Zealand, says this growth is a reflection of the strength of the New Zealand economy.

She says there’s always a correlation between GDP and ad spend and the healthy New Zealand economy has led to marketers spending more to reach consumers.     

The data shows that television remained the biggest contributor to overall ad spend last year, ahead of the digital category.  

However, it’s worth noting that SMI data only accounts for spend made through media agencies and does not include direct sales between clients and media owners, which in turn leads to categories reliant on direct sales being under-represented to some degree.

That said, the SMI data provides a helpful gauge on how the industry is performing across categories.

While the overall numbers enjoyed a five percent lift on the previous year, this was not reflected in uniform increases across all medium channels.

Television, newspapers, magazines and other (addressed and unaddressed mail) all suffered dips in annual spend.

With a year-on-year decline of $20.3 million, television suffered the biggest monetary drop, accounting for a five percent decline.

Coming off a much smaller base, the newspaper industry saw its ad spend slip by 13.8 percent as it shed $9.7 million.

The magazine industry took a big knock, with its ad spend dropping 10.3 percent ($3.3 million) from the previous year.

While the overall annual figures for print media weren’t great, Schulze points out that both the magazine and newspaper channels saw year-on-year lifts in ad spend over December.

Newspaper spend went up by 0.6 percent and magazine spend increased significantly by 14.5 percent (television also went up 3.8 percent in December).

“We haven’t seen this happen in any other market, and it will be interesting to see if this leads in a resurgence in print media,” says Schulze.

Schulze says that there was also a lift in spend in October 2016, but she initially wrote this off as an anomaly. However, when it happened again in December, it piqued her curiosity, particularly because the lift in magazine spend was so high.

On the topic of good news for traditional channels, outdoor, cinema and radio all increased their shares of the ad spend pie.

Outdoor came out as the biggest winner, enjoying a lift of 22.2 percent ($20.6 million).

“The growth in outdoor is an international phenomenon we’ve seen in a number of markets,” says Schulze.

This growth can firstly be attributed to the fact that outdoor has not been hit quite as hard by digital disruption. The channel remains effective in its ability to reach consumers as soon as they leave their homes.

And while the channel might not have the best targeting options, it remains a useful tool for marketers looking to reach mass audiences.

Another reason for the growth in the outdoor sector lies in the digitisation of sites, which has allowed for more ads to run in a single slot. If anything, digital has given the outdoor industry a means by which to increase the revenue potential of its assets.  

Of course, this now means that brands have to share the space with other logos but this doesn’t seem to be stifling demand for outdoor advertising.

To meet this demand, outdoor players are spreading their glow around the major metropolitan areas by investing in new digital sites.

Just this week, QMS announced a new initiative that will see the introduction of 39 animated digital sites across the Auckland transport network.

Cinema is also putting up a decent fight against digital disruption, growing its ad spend by 16.8 percent ($1 million).

Similarly to outdoor, it still offers a very effective means by which to reach consumers. In fact, cinema is one of the few instances where consumers willfully rush to watch pre-roll ads.

Once you’re in a cinema, there are no adblockers and the massive output of the surround sound system makes sure you hear what’s happening even when you’re staring at your mobile.

While its growth wasn’t quite as pronounced as that of cinema and outdoor, radio also had a successful 2016, growing its ad spend by 5.5 percent ($4.2 million)—which could be attributable to the fact that radio continues to have a strong hold on in-car listening.

Overall, 2016 was a good year for the ad industry in terms of spend. But, as Schulze points out, advertising goes hand in hand with the economy, which, as 2008 can attest, has a tendency to dip from time to time.  

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