Political advertising has contributed to a 3.5% year-on-year decline in ad agency spend in May as Canberra crowds out other advertisers, according a Credit Suisse analysis of Standard Media Index (SMI) figures.
Automotive was the only major category to grow in May, posting 14% yoy growth, in the face of a 44% increase in government advertising.
Retail fell “modestly” by 3% and retail “was particularly weak and has been a significant drag on the overall market over the past 12 months, down 10% during the period”.
May’s 3.5% decline in ad spend comes after 0.7% growth the month before and a 0.4% decline in March.
The weakness is expected to persist through to September with spend slated to recover later in the year with other advertising held until after the election.
While agency advertising is currently down 1.6% year-to-date it is forecast to experience total market growth (excluding digital search and classifieds revenues) of around 3% for the 2013 calendar year.
Digital posted double digit growth of 19.3% but the result is offset by newspapers’ 25% drop and magazines’ 18% slide in May.
After three consecutive months of growth outdoor slumped by 7% last month while radio remained positive, growing 3%.
The largest medium, television, pulled the market down with a 3% decline. The drop comes despite pay TV’s revenue increase (11.1%) with free-to-air’s 5% yoy drop in May offsetting the growth.
The 5% decline was linked to Seven heavily promoting its new shows and the later MasterChef launch.
“TV is responsible for ~50% of total agency ad spend and will be the major driver, and beneficiary, of a recovery in ad spend, in our view,” the report said.
“We expect Television ad spend to pick up in the second half, driven by increased advertising spend post-election and an easier base of comparison.”
Digital’s revenue in April was upgraded from 14.5% to 20.8%, suggesting May’s 19.3% result may actually be around 25% once search and classifieds spend is added, according to Credit Suisse.
Emerging platforms drove online display’s 7% growth.