What you need to know:

• The Reserve Bank’s second rate cut of the year brings the cash rate to 3.85 per cent, easing pressure on households and shoring up consumer and advertiser confidence amid macro uncertainty.

• Ad spend lifted 3.4 per cent in Q1, per SMI's Jane Ractliffe, but agencies and media owners say the market has softened post-election, reporting shorter booking cycles and client caution.

• Despite geopolitical and economic uncertainty, IPG Mediabrands investment unit Magna is still forecasting ad market growth for the full year "dominated by digital pure players", per product and innovation head Ros Allison. She also noted the strong growth for OOH and called out a boost for linear TV in the lead up to the election. 

• Indie media agency Match & Wood reports spend slowly shifting away from the Meta/Google digital duopoly amid increased scrutiny, with "mid-funnel channels like BVOD, TikTok, outdoor and radio", making some gains, per operations chief Christopher O'Keefe.

• Publishers News Corp, Seven, ARN, VMO and Man of Many think the rate cut, along with easing inflation, and a clear federal mandate following Labour's landslide election win should usher-in more stable market conditions and advertiser confidence heading into the second half.

• QMS Media's Chief Sales Officer Tim Murphy is already seeing it - May didn't bring an expected post-election quick lift in demand but briefing volumes had surged in recent weeks for June and the September quarter.  

Much needed rate relief is on its way to households this week following the Reserve Bank of Australia’s (RBA’s) second cut of the year yesterday, lowering the official cash rate target 25 basis points to 3.85 per cent.

The decision comes as inflation levels continue to moderate, though the RBA Board was far from upbeat in its prognosis, with global uncertainty contributing to a “weaker outlook for growth, employment and inflation in Australia”.

The Board signalled green shoots in private domestic demand as financial stress eases and projected growth in household consumption as real wages continue to rise – but at a slower rate than expected three months back.

Any pick-up in confidence and spend is welcome news for Australia’s media industry, particularly after the ad market this month hit post-election doldrums.

Guideline SMI figures this year have so far only been published up until February, though the firm’s regional boss Jane Ractliffe said March data indicates ad spend was up 3.4 per cent in the first quarter of the year. She highlighted that outdoor media was continues to lead growth (up 13 per cent), with digital up 4.7 per cent and linear TV back 2.4 per cent.

While election spending provided a tailwind until early May, US tariff flip-flops have wobbled markets and advertiser nerves.

Agency outlook

Speaking with Mi3 ahead of the RBA board meeting on Tuesday, Magna product and innovation head Ros Allison confirmed the market had “eased as expected” post-election, with the IPG Mediabrands investment unit seeing a “shortened forward market for May” and “lower visibility than typical” for June and July.

On the advertiser side Allison said global economic uncertainty had been indiscriminate, with confidence “less category or product-related than typical”, and more dependent on geography, with “global and US-based advertisers” potentially less confident than their local peers.

At independent shop Match & Wood, chief operating officer Christopher O’Keefe saw a similarly “soft” and “shorter” market, noting that caution had clients “looking for flexibility in their commitments” – though, just as he told the Future of TV Advertising conference in March, the agency is yet to see any “major pullbacks” in spend.

Widespread anticipation for yesterday’s cut mean it was baked-in - i.e. it’s “unlikely to deliver a tangible or immediate uptick in spend,” per Allison. But Magna remains broadly optimistic for the local ad market through the second half of the year.

“We're still forecasting total market growth in 2025, dominated by digital pure players,” said Allison, noting that social and search continued to outperform the total market.

She added that OOH had seen strong growth too and, while linear TV had seen strong growth during the election lead up.

“Australian market fundamentals are positive, and notwithstanding the election spend impact, we've seen growth even for traditional media owners year to date.”

Match & Wood's O’Keefe reckoned performance channels like Meta and Google are increasingly under scrutiny as marketers questioned last-click attribution, with his agency observing “gradual shifts towards mid-funnel channels like BVOD, TikTok, outdoor and radio”.  

Sustained price inflation within search and social has led other marketers and agencies to likewise seek alternatives.

But in contrast to Magna's forecast, O’Keefe is unconvinced cautious optimism will hold.

“It’s starting to feel like the calm before the storm," he said.

“Quiet redundancies are building across creative, media agencies, and the media supply chain, and in the background, the holdco’s seem to be running without a coherent strategy, defaulting to spreadsheet-led staff cuts.”

WPP-owned GroupM earlier this month signalled major reductions are incoming globally. Whether that is 'spread-sheet-led' staff cuts or a more fundamental shift in strategy remains to be seen.

Despite sticking to its forecast, Magna's Allison conceded significant risks – “uncertainties of tariff chaos”, “shambolic US trade relations” and “geopolitical instability” – could cloud the picture locally.

Publishing

News Corp Australia’s Pippa Leary said the macro market has been “incredibly challenging”, with interest rates, tariffs and disappearance of election spend heaping pressure on the company’s sales team. The Australian arm of the Murdoch media empire posted an 8 per cent decline in advertising revenue in the March quarter – or 4 per cent on a constant currency basis.

Leary positioned News as "grabbing share" as agencies buy-in to the strategic products it outlined during this years roadshow – but acknowledged publishers are having to earn every cent.

“While we can see this macro, softer environment for news, we're getting very positive interactions because we are deep into coming up with solutions,” said Leary. “If we weren't doing a lot of this very proactive outreach with our clients, we would be really feeling it.”

She said uncertainty, market volatility and weak consumer confidence has made it "harder and harder [for clients] to plan their spends ... That is absolutely having an effect on us and every publisher, every media organisation in this country.”

Client partnerships MD Lou Barrett was likewise wary of a “volatile” market, but said News had started to see “some EOFY revenue come through” – and a rate cut “should help this somewhat”.

Scott Purcell, co-founder at independent publisher Man of Many, agreed global economic uncertainty and supply chain inflation is “definitely impacting domestic demand for ad spend”.

That has created “shorter cycles” of client commitment, compounded by up-and-coming channels like connected TV (CTV) and retail media siphoning spend away from digital display. Purcell noted that for many indie publishers, those pressures have not been offset by election spending.

“I personally would be really pushing for the DPA [Digital Publishers Alliance] to look at if there's a way to kind of mandate that a portion of those funds can go to some smaller, independent news publishers to make sure that there's kind of continued diversity and support for a diverse media landscape,” he said.

Despite that, Purcell said Man of Many has actually increased ad revenues year on year. It's small scale means “any market share we do pick up is quite sizeable and tangible to the business".

Audio

Two months on from making the jump from Nine, ARN operations chief Michael Stephenson pointed to the “resilience” of the total ad market in what has been a “challenging” couple of years.

While “some sectors within the ad market” have had “bigger challenges” than others, Stephenson is bullish that total audio will continue to grow in the mid-single digits “for the foreseeable future” – the traditional radio market having remained “thereabouts flat” and digital audio charting circa “30 per cent” in over the last couple of years.

“The digital audio market keeps growing and the radio market has had a relatively good first quarter – and a good April given the impact of the election revenues.”

Stephenson said the “softening of the market” into May is par for the course post-election – and is not concerned it will carry through.

“I suspect that’s a short-term challenge, and that those market dynamics of mid-single digit growth of the total audio market will continue into the second half.”

He said the RBA’s decision on Tuesday wasn’t a “catalyst for change” in itself, but that with easing inflationary pressure and a strong job market, marketers should be feeling more confident.

Outdoor

The outdoor media industry’s steep upward trajectory post-pandemic has buffered the impacts of recent pressures.

“We've been fortunate, we've had high double-digit growth each year for the past three years,” managing director of Val Morgan Outdoor (VMO), Paul Butler, told Mi3.

“We've seen bit more of a normalisation in the first few months of this year, but still high single or low double-digit growth, which is pretty buoyant compared to the rest of the media market.”

He said the industry has invested heavily in infrastructure – with digital now accounting for 70 per cent of OOH spend – and is “getting better at telling the story about the size and scale of its audience”. The firm is also targeting CTV dollars through its digital screens and going to market with combined buys while the launch of industry currency Move will bring much more of its asset-base into the measurement mix, where hourly measurement data could deliver upside for programmatic sales.

While noting advertiser caution, Butler said VMO is attracting new advertisers “that haven't necessarily used our networks before”. Across the board, he says there’s been disproportionate interest in the company’s newly launched experiential ‘Dimensions’ product suite, with brands “finding the money” to engage in opportunities to stand out.  

Short-termism is also at play. While some clients are still “committing upfront”, it's only on a quarterly basis. Others are being more tactical.

“We’ve had some quite sizeable campaigns where we get briefed and booked in a week, which is unusual for big campaigns, but we've seen that quite consistently,” said Butler.

But “with the election out of the way” and the RBA’s decision now providing “a bit of interest rate relief” he's expecting some pick-up.

“Any of those cautious advertisers waiting to see how the year pans out, I think they'll get into the market in the second half.”

That sentiment was echoed by QMS Media's Chief Sales Officer Tim Murphy who noted post-election the "short-term money did not come like we thought it would". But in recent weeks he has seen a big turn in demand and incoming briefs for June and the September quarter. "We've seen very significant briefings in the past couple of weeks," Murphy told Mi3. "Significantly more than normal. We've probably had the biggest couple of briefing weeks for a year. What we are seeing is some good medium-to-longer-term planning coming into the briefing process. It suggests we should be very optimistic for the second half of the year."   

Confidence boost

Seven West Media revenue chief Henry Tajer suggested market volatility is the cyclical norm.

“The ad market is constantly moving, and it's a pretty dynamic market. There are ups and downs and that has always been the case,” he said.

Despite the slow-down post-election, Tajer said the resounding Labor majority should underpin confidence.

“It's a positive sign that government has strong support through the electorate and now has an opportunity to move with haste… I see that as a confidence-building dynamic in market.”

Tajer had hoped the RBA would be more bullish and stimulate economic growth with a 50 basis point cut. Despite the more restrained approach, his broader view of market confidence still stands.

“If you look at some of the macro indicators, there's reason for the market to start to get a little bit more confident about what's happening locally.”