Interest rate rises have not only hit homeowners but also the advertising industry. Banks have been reigning in spend on home loan advertising — the second-largest subcategory within bank advertising.
Numbers from Standard Media Index (SMI) showed that in three months to 30 June, home loan advertising was down 12.5 per cent. In fact, for the entirety of this year, home loan advertising was down by 12.8 per cent compared to 2021 when official interest rates were down at 0.1 per cent.
“The double-digit decline in the value of ad campaigns promoting home loans looks to be a direct consequence of the current higher interest rate environment, with banks and other providers seemingly more reluctant to promote mortgages at the current higher rates,’’ Jane Ratcliffe, SMI Asia-Pacific managing director told The Australian.
“Home loans is the second largest subcategory within SMI’s banking category and its decline is the main reason the banking category is reporting a 3.1 per cent fall in ad spend in the second quarter.’’
However, the decline in advertising has come at a time when the big four banks are making money hand-over-fist. Commonwealth Bank recorded a record $10 billion in profit for this financial year — up six per cent year-on-year. Westpac, meanwhile, posted $4 billion — up 22 per cent — for the first half of this year. NAB also posted $4 billion in profit for the first half of this year year, a 17 per cent surge. ANZ recorded $3.82 billion in profit, up 23 per cent.
Much has been made off the fact that these profits are coming at the same time as an acute cost-of-living crisis affecting Australians with rising prices and rising home loan interest rates.
While there has been some anecdotal evidence that the banks are starting to boost general advertising, particularly CommBank during the World Cup thanks to its sponsorship of the Matildas, this has not been enough to offset the drop in home loan ads. According to the SMI, bank ads spruiking sponsorship were up 5.4 per cent during the last calendar year.
Whether the banks have been taking a step back in their home loan advertising for fear of appearing tone-deaf during the cost-of-living crisis and shifting focus onto their sponsorships and other brand-led spots is unclear. We should find out with the next set of SMI figures.
