Australia’s ad spend fell 2% in 2025, with December down 9.2% amid budget cuts in government and retail. Outdoor and streaming grew, but forecasts for 2026 predict 4-6.5% rebound in Sydney and beyond.
Ad Spend Tumbles 9.2% in December, Wipes Out Early 2025 Gains:
Australia’s advertising sector closed 2025 on a downbeat note, with December spending tumbling 9.2% and dragging the full-year total down 2%. According to Guideline SMI data, which tracks media agency bookings, the slump wiped out a modest 1.6% first-half uplift fueled by federal election campaigns. This reversal signals broader caution in the economy, hitting businesses from retailers to agencies and potentially signaling tougher times ahead for media outlets reliant on ad revenue. As cost-of-living pressures bite consumers, the ripple effects could slow recovery, underscoring the fragility of post-pandemic growth.
SMI 2025: Outdoor Wins, Digital Stumbles:
The Guideline SMI report, released on February 2, 2026, revealed a stark end to the year for Australia’s media agency market. December bookings fell 9.2% year-on-year, contributing to a 6.6% decline in the fourth quarter-the lowest level since 2019. This capped a volatile 2025, where total ad spend ended down 2% overall.
The timeline traces back to a promising start. In the first half, spending rose 1.6%, largely thanks to heightened government outlays during the federal election period. However, momentum faded post-election, with the second half seeing a 5.2% drop. Key drivers included sharp reductions in major categories: government spending plunged 31.7% in the fourth quarter, stripping $68 million from the market, while retail and food/produce/dairy sectors posted double-digit declines, with food down 19% in the first half alone.
Media performance varied. Outdoor advertising emerged as a standout, growing 5.3% for the year after an 11.6% first-half surge, though even it felt the December chill. Digital bookings edged up 1.2% annually but slumped 9.3% in December, attributed to delays in finalizing programmatic costs-currently showing an 18.4% drop in that segment, expected to moderate. Online streaming was the sole bright spot in the second half, with revenues up 9.2%. Linear TV saw a slight 0.4% uptick in December, boosted by Seven’s cricket broadcasts and SBS growth, while cinema rose 3.6%.
Australia’s 2025 Ad Slump: From Boom to Bust:
Australia’s ad market has long been a bellwether for economic health, reflecting consumer confidence and corporate budgets. The 2025 downturn follows a post-COVID rebound, where 2024 saw modest growth amid easing restrictions. Historically, SMI data-focusing on agency-booked media-has tracked cycles tied to events like elections or economic shocks. The federal election in early 2025 injected temporary buoyancy, similar to how political spending lifted figures in prior cycles, but its absence exposed underlying weaknesses.
Broader factors include persistent inflation, which hovered around 3-4% in 2025, squeezing household budgets and prompting cutbacks in retail and food sectors. Cost-of-living pressures, exacerbated by rising energy and housing costs, have led consumers to curb discretionary spending, reducing the need for aggressive advertising. Meanwhile, the shift to digital and streaming continues a decade-long trend: digital’s 1.2% growth, though modest, builds on its dominance, now capturing over 45% of spend per earlier SMI benchmarks.
For media companies, the 2% annual decline translates to lost revenue-potentially hundreds of millions across the industry-pressuring outlets like TV networks and publishers already navigating cord-cutting and algorithm changes. Agencies face slimmer margins, while brands in hit categories like government (post-election pullback) and food (amid supermarket price wars) signal caution. This could foreshadow slower GDP growth, as ad spend often correlates with economic activity. Contrasting views emerge from broader estimates: WPP reported a 5.2% market expansion to $28.9 billion in 2025, likely including non-agency channels like direct deals and retail media, highlighting methodological differences-SMI’s agency focus captures about a third of the total market.