3 Pressures Threatening to Shrink your Ad Dollar

Advertiser confidence + Federal Election + EOFY = Get your Ad Space Booked ASAP.

Red and white triangular warning road sign with a warning of rising prices ahead concept against a partly cloudy sky background

Tom Evans and James McDonald of media agency Audience Group offer a media strategist’s take on three disruptive influences Australian advertisers need to deal with, now.

What does an impending federal election have to do with your advertising and marketing strategy? If you’re planning on booking ad space, plenty. In fact, with the end of the financial year (EOFY) approaching as well, whoever is planning your media spend strategy and schedule has multiple disruptive influences to consider.

1.    Demand and Costs Already on the Rise

Marketing professionals negotiating for ad space and working with media strategy partners will already have taken note that, as their own advertising programs ramped up over the course of 2021, so did competition for advertising inventory. Business confidence and our economy weathered the impacts of Covid-19, and advertising programs revved up again. Remember that cinema and radio space that was going cheap(er) because people weren’t getting out as much, if at all? Those prices are back to normal, and normal means they are part of the inflation of media prices being felt around the world. 

Globally, media prices inflated in 2021, especially for TV1. Unsurprising, to be fair, as everyone had to do something while stuck at home. Online prices have seen steady inflation throughout the pandemic, which also makes sense.

According to the latest prediction, media inflation is expected to continue to rise over the course of this year, though the Asia Pacific region should see lower overall inflation than other parts of the world. Expect that your ad dollars will not go as far as before, when it comes to TV, online media and OOH.

2.    EOFY is a Great Excuse to Raise Prices

Despite the annual EOFY deals on whitegoods, technology and myriad other goods and services, it’s also a deadline after which price increases are announced. This holds true for advertising inventory. It happens every year, and this year will be no different.

Consider an acquisition performance campaign that has a 5% increase in its CPM cost. You don’t need to be Einstein to work out that if all other performance measures such as click-through-rate and conversion rate remain the same, then cost-per-acquisition will increase by 5%. So now you’re already 5% behind your target.

3.    A Federal Election Eats up Advertising Inventory

If you want to leverage the Federal Election timing in your ad creative, hopefully you’re already onto that. It’ll be even more important for your media agency to get the placement and timing right.

But you don’t have to have an obvious connection to the election for your advertising strategy to be impacted. It’s a question of available space.

According to a report from Neilson, the Australian Commonwealth Government was 2021’s top advertiser. A quick search on the topic will find that the increase in ad spend by sitting governments as well as during political campaigning is a topic of debate. Whether you believe these funds could be better spent, or not, the fact remains that in an election year your messages and products are jostling for print, digital, social and outdoor advertising space and attention versus the hefty budgets and agendas of political campaigns.

What can you do about it?

3 Ways to Stretch your Ad Dollar

1.    Negotiate and book before EOFY

You can often pay this year’s prices for the new financial year’s inventory if you book in advance. 

Sometimes you also have to pay in advance, so if you can allocate advertising dollars now, you can realise real savings across your overall media spend. 

In some cases you only have to agree to be invoiced (or for your media agency to be invoiced) now, with generous payment terms allowing you to dedicate funds from next quarter’s budget. It’s worth negotiating for!

2.    Strategise around Election Advertising 

Has the upcoming election impacted your creative? If yes, that – as well as your rationale as to why you’re connecting your messaging to the election and what you hope to accomplish – will make a difference in terms of where and when you need to advertise. Discuss with your media buyer and / or media agency asap, if you haven’t already.

Either way, you need to determine how political ad spend will impact your own access to airtime and strategise accordingly. Maybe it means going head-to-head and spending more for precious inventory because it matches with your objectives and will return value by reaching your key target audience.

But it might mean that you consult with your agency partners to grab the airtime that isn’t so sought after because there’s a way to make it work for you.

3.    As always, Consult your Data

Deciding where you should be spending your ad dollars, when and why starts with leveraging the right first-party and other data to answer the right questions. Make those questions and objectives relevant to key business objectives, and you can demonstrate to your business how your advertising decisions are contributing to increasing profitability in the lead up to a new financial year … i.e. when they’re discussing next year’s budget allocation.

[1] ECI Media Management Inflation Report Q1 2022

This article was contributed by Audience Group

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