We’ve got to hit bottom some time. Could it be now?

Welcome to a midweek update from Unmade: Today: As the Unmade Index hits a new low, Nine and Seven West Media see their share prices fall to 2020 levels, and the Roy Morgan Research consumer confidence index hits a low for the year, we ask: are we finally hitting bottom?

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Darkest before the dawn?

I am, by nature, a catastrophist. Anyone who grew up in the UK in the 1980s, within the blast radius of the Greenham Common missile base and the Aldermaston nuclear research lab would be.

But writing today’s piece, I really, really tried to find the case for optimism when it comes to the economic outlook for media.

Since Nine’s financial results a fortnight ago, I’ve been looking for evidence that chief sales officer Michael Stephenson was right when he told analysts: “What I am increasingly more confident about is that we are, if not at the bottom, certainly very close to the bottom of the ad cycle.”

I first appreciated how bad things were getting in November last year.

I caught up with one of the ad industry’s loudest champions, somebody who a year before had been critical of people for talking the industry down. That previous optimism wasn’t just a stance – everybody always feels obliged to exude positivity on stage – he’d been saying the same thing in private.

Now he too was predicting that 2024 would be tough. The last adland bull had become a bear.

Yesterday, I encountered the first industry leader who genuinely means it when he predicts that a turn is coming. His argument is a simple one: all of the indicators we currently see are in the rear view mirror. Falling inflation will soon mean that interest rates will begin to come down, and maybe sooner than we think. That will transform the consumer outlook, and the wider economy.

Yesterday we got a slew of new data.

The Unmade index, our tracker of listed media and marketing industry stocks, hit a new low, falling another 1.3% yesterday.

We usually hold this graph back for Unmade’s paying members. As you can see, the index fell this far a couple of times before quickly bouncing back again.

It fell to 566.1 points yesterday. That’s the lowest the Unmade Index has been since we started it at 1000 points, just over two years ago. That means that media stocks have lost 44% of their value since then. Thank goodness for the buzz around the ARN media – Southern Cross Austereo takeover, otherwise it would be even worse.

The investment community might be right or wrong, but its collective wisdom is that we’re at a low point. Nine’s market capitalisation of $2.6bn is its worst since August 2020; Seven’s $315m the worst since since November 2020.

Another collective wisdom is that the advertising funded media rise and fall disproportionately with the wider economy. On the downside that was certainly true – there’s been a real terms advertising recession for years now, even as the economy scraped by narrowly in positive territory.

Soon (hopefully) we’ll find what happens when consumer confidence returns with falling interest rates, and whether there’s been serious structural change as well as cyclical.

This week we had a load more backwards looking data.

Last night Roy Morgan Research released its consumer confidence index for the first week of March. It’s down 2.2 points to 81 points, the lowest this year.

Yesterday, the March edition of Pearman Media’s always informative Pearman Pulse shared an early take on the January media agency spend numbers from SMI Guideline. The numbers are showing as down by 5.7% compared to January 2023. Although last bookings should see that number improve a little, it was still a negative number, compounding on last year’s negative January number. But not, however, as big a fall as November and December showed.

In the wider economy, on Monday we saw a surprise fall in the amount of stock held by companies during the three months of October to December. That bodes badly for the wider gross domestic product figures, being released at 11.30am eastern, today. Two negative quarters in a row, puts the country officially back into recession.

And, the other piece of data this week was real estate auction clearance rates which softened last weekend, to 71.8%. Usually the run up to easter is boomtime for real estate, so that’s another slightly concerning indicator.

So, other than the forthcoming reduction of interest rates, what are the cases to encourage the last remaining bulls?

One other thing to look out for is the quadrennial effect. Back when he was running WPP, Sir Martin Sorrell used to point to the four yearly alignment of the US presidential campaign and the Olympics as generating enough spend to lift adland’s global performance.

Over the next quarter, we’ll begin to see whether that still holds true. That’s particularly important for Nine, which holds the Olympics media rights across, TV, online and radio.

On the downside, third party cookie deprecation is looking, which will have a big impact – maybe underestimated – for publishers. And the government’s crackdown on sports advertising on TV is yet to land.

And finally, there’s the huge unknown of generative AI. It will certainly mean more efficient companies. Bears would say that increased productivity is seen as good for the economy, certainly in the long term. But yet to be quantified is just how much disruption it brings to jobs, with the white collar media sector at far more risk than blue collar workers.

The cliche is that it’s darkest before the dawn. Let’s hope so, because it’s pretty fucking dark right now.

Time to leave you to your Wednesday. By the time this lands into your inbox, I’ll be in the coffee queue at The Fullerton in Sydney ahead of the opening of the Future of TV Advertising conference. Agenda item one: replacing lost linear reach. More on that on Friday.

We’ll be back tomorrow with an audio-led edition, featuring an in-depth chat with the founders of email newsletter (and accompanying podcast) The Squiz, Claire Kimball and Kate Watson.

Have a great day.

Toodlepip…

Tim Burrowes

Publisher – Unmade

tim@unmade.media