Media spending picked up in a big way during 2010 as businesses started devoting more time and effort to their marketing budgets after stripping them during the global financial crisis in 2009, new Neilsen figures reveal.
Among the top spenders were retail giants Wesfarmers and Woolworths, whose media spends increased by 15% and 17% respectively as they focused on their price-war and discounts campaigns, while McDonald’s recorded the biggest increase at a massive 30% to $74.7 million.
Neilsen Australia media division managing director Peter Cornelius says while the result is “definitely not usual”, the figures have the potential to be misleading as they’re coming off a very low base.
“What we’re really seeing is the balancing out of the media industry over two years, because you can’t really look at the 2010 figures without looking at 2009 as well,” he says.
“While we never officially went into recession, we certainly had a media recession, and every market went backwards. 2010 is really a type of correction where we’ve strengthened off that very low base – this is why you have increases of over 10% across the board.”
Among the biggest increases were Telstra, whose spending increased by 20.9% to $120 million as it attempted to gain new mobile customers in the lead up to the NBN, while The Commonwealth Bank and ANZ both increased their spending by 12% and 11% to $77.3 million and $55.6 million respectively.
Many of the big spends are embroiled in industry wars. Wesfarmers and Woolworths were listed as the top spenders, while Myer is also listed as one of the major spends, rising 1.6% to $62.1 million.
Cornelius says increased competition in both the retail and banking sectors represents a big boost for the media industry.
“I think the industry generally loves to see wars. So during the course of last year you saw Coles versus Woolworths, and that seems to still be going on with them competing against each other.”
“There’s also a war going on between the banks, which is wonderful, where they are all trying to claim at least some market dominance and cut through each other. That’s positive for the industry, and during the course of last year we noticed the insurance market has begun to increase s well.”
Qantas increased its spending by over 24% to $64 million – Cornelius says travel will be big on the agenda for the next year as the dollar remains high.
“People are beginning to choose more overseas destinations, and aren’t staying as much as home anymore. Obviously that’s a concern for domestic travel,” he says.
Government spending has recorded a big drop, with Federal Government cutting back 11% to $114.2 million. Cornelius says this is a cyclical result and will continue to rise over the next two years.
“The Government advertising is very much based on the election cycle. You can pretty much plot on a map when an election is going to be, because they all bring up the need to more prudent with spending and so on.”
“Then when they get towards the end of their tenure, they generally start spending again.”
However, going forward Cornelius doesn’t expect the numbers to be as high. While there will still continue to be some particularly large spends among certain industries, overall growth will begin to taper off in 2011.
“Because the base spending is now back to a more acceptable level, you’re not going to see the significant percentage movement increases that you did before.”
However, he says it will be difficult to forecast what’s going to happen overall.
“Trying to forecast what’s going to happen is obviously very difficult, but I think we can see… you’d probably see the insurance industry not spending quite as much.”
“Retail is by far the largest category overall in the list, but there are so many components. We saw during the GFC that big buys like Harvey Norman were actively promoting electrical equipment.”
Australia’s top 10 media spenders in 2010:
1. Wesfarmers – up 15% to $238.9 million
2. Woolworths – up 17.7% to $166.2 million
3. Harvey Norman – up 7.4% to $145.2 million
4. Nestle Australia/L’Oreal – up 8.5% to $121.3 million
5. Telstra – up 20.9% to $120.4 million
6. Federal Government – down 11.6% to $114.2 million
7. Victorian Government – up 11.7% to $103.9 million
8. Toyota – up 26.3% to $82.1 million
9. New South Wales Government – up 19.9% to $81.3 million
10. SingTel – up 12.1% to $81 million.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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