The advertising market has broken through the $10 billion barrier for the first time, with radio featuring prominently.
Media spending on radio has grown 14.2% in 2004 to $842 million (up from $737 million).
Commercial and Economic Advisory Service of Australia (CEASA) figures show advertising revenue for print, tv, outdoor, radio and cinema have risen 10.4% to $10.4 billion. However, senior buyers and analysts say such growth is unsustainable and a cooling off is inevitable.
The rate of spending is at its fastest in more than 15 years, and it is the first time mainstream media spending had grown at a double digit rate since the late ’80s.
CEASA Chief Executive, Bernard Holt, has told The Australian’s Simon Canning there are several reasons for the growth, and he does not see any looming factors to slow things down.
“Since it went down by 6%, I think a lot of the growth subsequently was catch up. But, the the real crux of the matter is competition. Everything from finance to cars, they are all reaching out, using any form of advertising they can lay their hands on.”
Total newspaper ad revenue has jumped to $2.175 billion, magazines are up by 10.7%, outdoor (10.3%) and cinema (12.7%).
Starcom chief and Media Federation Chairman, John Sintras, says the retail wars played a large role, but there are other factors.
“I think it reflects a period of coming back from where we were. But, also, there were no major disasters, no Enron, no war. But, I don’t think last year’s growth is sustainable.”
Austereo Chief Executive, Michael Anderson, has told The Sydney Morning Herald’s Marketing Editor, Paul McIntyre, the radio market’s 14.2% rise in ad revenues will not be matched this calendar year.
“However, the sector is still growing in high single digits. The market isn’t tracking at 14% growth, but it’s still very healthy.
“Some advertisers are telling us they’re making some reductions in tv spending this quarter, but that doesn’t seem to be flowing to radio.”
Mitchell & Partners’ Harold Mitchell says battles between Coles and Woolworths and Myer and David Jones have drawn other retailers into the fray.
“I don’t see a downturn in the market, but I certainly think it will moderate.
“That said, later this year, we will see a large number of product launches in automotive and telecommunications.”
Analyst, Steve Allen, of Fusion Strategy, says the market has turned.
“It started in December, although it varies hugely by media type. Our prediction for this year was way too high, but the market is still strong, just not double digits, more around sevens or eights.
“Some media are already having difficulty matching last year’s numbers.”