CFOs, institutional bankers and economists are all talking about inflation and interest rates but marketers aren’t, writes Prophet CEO Jordan Taylor-Bartels. Here’s why that’s a big problem.
I was reading an article last week (can’t for the life of me remember where) – but no one really talked about it at all. The headline was that the four big tech platforms pulled in over $100 billion in advertising revenue in the first three months of 2026.
Globally, a pretty big number. Locally, a different one matters more – particularly here in Australia.
The Australian internet advertising market grew 11.5% in 2025 to reach $18.4 billion. Q4 alone was up 14.4%.
In the same period, Australian inflation hit 4.6%, the highest reading since September 2023.
Methinks those numbers doth not reconcile.
The Boulder
Cost of living is hitting the consumer harder than it has in years. Real wages are going backwards. The household reaching the bottom of your funnel has measurably less in the bank than they did 12 months ago.
The industry response has been to push more dollars to get more out of it (it being the households mentioned above that sit at the bottom of the funnel).
That’s a boulder going up a hill. The hill is the consumer’s purchasing power. The boulder is real-terms ad spend. And…the hill is getting steeper. The boulder is getting heavier.
When does the Indiana Jones sprint start?
I don’t think this gets discussed enough.
Maths Lesson #1: The Fisher Gap
Real growth equals nominal growth minus inflation. In my chats with CFOs, institutional bankers, and economists, this is what they do without thinking. And whilst simple, it’s the kind of equation marketers almost never talk to.
So let’s run it on both sides.
Australian ad spend, 2025: 11.5% nominal growth, minus 4.6% CPI, equals 6.9% in real terms.
Australian wages, year to December 2025: 3.4% nominal growth, minus 4.6% CPI, equals negative 1.2% in real terms.
At Prophet we’ve calculated that the gap between what marketers are spending to reach the consumer, and what the consumer has to spend back, opened 8.1 percentage points in a single year. WTF?
That’s not a small gap.
Maths Lesson #2: The Platform Tax
Meta publishes its average price per ad in quarterly SEC filings. Across 2024, that price was up 10% year on year. Across 2025, up another 9%.
Australian CPI is 4.6%. Meta’s price per ad is sitting at roughly 2x that.
The implication is fundamentally structural. To stand still on Meta in real terms, a brand needs to grow its Meta budget by 9% nominally. This is before any audience expansion, before any new test, before any campaign extension. A flat budget is a real-terms cut.
Maths Lesson #3: The Dashboard Lie
A worked example. Hypothetical brand (but aggregated through our data). Reports the following:
- Revenue up 8%
- Spend up 11%
- Nominal ROAS roughly flat
The reporting says efficiency is holding up pretty well. And by implication, the CMO can stand in front of the board without a mouth-guard in.
Now run the same numbers on real inputs:
- Revenue up 8%, deflated by 4.6% CPI, equals 3.4% real
- Spend up 11%, deflated by 9% media inflation, equals 2% real
This (hypothetical of course) brand is barely holding ground. Run it on a Meta-heavy mix with 5% revenue growth and the brand is going backwards. Yet everything says it is still performing.
In a 4.6% CPI environment with 9% media inflation – this isn’t some trendy way to measure efficiency or performance – you are measuring drift.
It’s not like this kind of maths is subtle – it just simply isn’t being done – or if it is, it isn’t being exposed and used.
What Else Are We Missing?
If inflation has been this visible, in the headline CPI print, in every household’s grocery bill, in every CFO’s planning deck, and the industry’s measurement still hasn’t adjusted for it – the question isn’t whether that’s incompetence or whether it’s convenient. The question is what else is being missed?
Interest rates. Consumer confidence. Category demand cycles. Competitor pricing. Weather. Population Movement. Behavioural Choices. Political Preference. Each of these moves the consumer’s behaviour in ways that show up in the data, and most measurement frameworks ingest none of it.
This is what we’ve built Prophet to do differently. Our models ingest the macroeconomic and behavioural context (more than anyone else), the category context, and the competitive context as inputs alongside the media. Not because it’s clever or anything like that. But because every lesson the industry learns about measurement, it learns in a vacuum, and the vacuum is the problem.
Where This Lands
The boulder will roll back. Some marketers will see it coming – those surrounded by (real) number people. The ones whose CFOs are (even if by a tangent) in the measurement room. The ones whose frameworks test the strategy rather than confirm it.
The rest will be standing in front of it.
The industry has spent five years arguing about attribution, identity, and AI.
The bigger problem was always inflation. Just wait and see…
