Media agencies continue to reduce their spending on news media brands at a rate far higher than direct advertisers, according to the latest News Media Index.
The index found that Australia’s news media sector reported $2.28 billion in advertising revenue for the 2016 calendar year – down 7.5 per cent from 2015.
Unsurprisingly, print saw the biggest decline – down 11.3 per cent to $1.70 billion – while ad revenue for newspaper-inserted magazines dropped 9.2 per cent.
Digital was the only sector to witness an increase in ad revenue last year – up 9.9 per cent.
The index, which is independently verified by Smart Media Index (SMI), also found that the buying decisions of media agencies continues to be out of sync with those of direct advertisers.
Digital revenue from direct advertisers grew by 21 per cent in 2016, while agency revenue fell by 0.5 per cent. The index noted that this discrepancy also applied to print revenue.
SMI’s managing director for Australia and New Zealand, Jane Schulze, said total News Media Index bookings from direct advertisers grew to 51.7 per cent of all news media advertising expenditure in 2016 – up from 49.9 per cent in 2015 – as agencies continued to reduce their spend on news media brands at a “far higher” rate than direct advertisers.
“As an example, direct advertisers grew their ad spend on Melbourne’s metropolitan titles by 1.2 per cent in CY2016, while agency spend on the same titles fell by 15.5 per cent,” she said.
“It raises a valid question as to how the same titles could obviously deliver great value for direct advertisers while the agency market looks elsewhere.”
NewsMediaWorks CEO Mark Hollands said the spending trend of media agencies was concerning and unwarranted.
“News publishers have maintained incredibly strong audience engagement, delivering quality environments that advertisers desire,” he said.
“Marketers who deal directly with publishers understand this and appreciate the value.
“Agency choices on behalf of their clients are out of sync with the many advertisers who choose to commercially engage directly with publishers.”
Hollands predicted that readers and advertisers would continue to rely on news media brands for trusted journalism and analysis.
“The unfolding political events in the United States and Europe will ensure that publishers continue to deliver engaged, articulate and valuable audiences through 2017 and beyond,” he said.