Page 42 - Adnews Magazine November-December 2021

Investigation
Ridingagiant TheAustralianeconomyhasemergedfromtheCOVID-19pandemicin overdrive
ad wave
Money is being pumped into advertising as brands chase consumer dollars out of lockdown, but how long will the surge last and where are the opportunities?
WORDS BY
CHRIS PASH
Consumers ran from their lockdown cages with shopping bags in hand. Brands are spending on advertising to lure these spenders who are intent on revenge shopping to make up for lost retail therapy time.
Ad spend edged higher than 2019’s pre-pandemic and there’s more ahead as dormant categories, including travel, return.
When there's a lot of work for agencies, everyone talks about the talent squeeze, sparked by layoffs in 2020, and a stop in the flow of talent from overseas.
The COVID-19 pandemic also created significant human change. The Great Resignation is here as everyone reassesses their place in the world: Do I really want to work there/five days a week/at all?
This all means growing revenue, the prospect of better pay for those at the coalface and high demand for media platforms, especially television and digital.
The strength of the rebound surprised many. Steve Allen, director of strategy and research at Pearman Media: “2021 was much stronger, and far faster in recovery than any predictions — especially ours.”
But how long will it last? The economic miracle is fuelled by the huge sums pumped into economies by central banks. One day taxes must rise to help pay/service that debt.
“What to make of 2022, when a number of key consumer categories have been both disrupted and heavily restricted, and yet to recover to 2019 spends, notably travel and tourism, and automotive?” says Allen. “We forecast a continuing growth in media markets’ advertising revenue in 2022 ... of +7.25%. Digital is the real driving engine, and given it is near 65% share of the media markets, it distorts the overall picture ... However, there is lots of conjecture and some research, statistics and evidence that there is pent-up consumer demand awaiting unleashing.”
By the September quarter of 2021, the major global advertising com- panies had passed — or were soon to pass — pre-pandemic revenue levels. But there are more changes ahead.
Greg Paull, co-founder and principal, R3, says the lift in ad spend and holding company revenue needs to be viewed through the lens of a different world with clients who need partners who can work within a new model.
“Dance cards are going to be changing for a while,” he tells AdNews.
“In Australia, clients will increase ad spend as part of their recovery strategy. Digital and social will be strong. So will the demand for services related to ecommerce, data and analytics. The talent crunch will affect wages, which is going to increase operational costs for both clients in-house and agencies.
“What marketers need to look at for 2022 are the alignment of their agency model with new strategies, ensuring the cost-efficiency of in-housing, and the ROI on digital media spend as the cost of customer acquisition increases.”
Market analysts, seeing strong growth in the Standard Media Index (SMI) agency data, are more upbeat about the 2022 financial year.
Investment bank UBS upgraded its metro free-to-air (FTA) ad market forecast from 4% to +6.5%. “The combined TV ad market ... Metro linear FTA plus Broadcast Video on Demand or BVOD ... could be at an inflection point,” the UBS analysts said in a note to clients. “While traditional linear broadcast TV is likely to face ongoing structural pressures, growth in BVOD can be an offset on a three-to-five-year view.”
UBS also forecast BVOD growth of +40% for the 12 months to the end of June 2022. This implies +9.5% growth for combined metro FTA and BVOD.
Mark Frain, CEO at Foxtel Media, says the strong run will last as long as brands see opportunities to grow.
“The accelerated shift to ecommerce and the changes in consumer behaviour, driven by the pandemic, will continue to create these oppor- tunities in the short-term,” he says.