Robust Aussie dollar limits global media reach
Prime minister Julia Gillard says the strong Australian dollar is “good for some industries and bad for others,” so what does it mean for international marketers targeting Australians?
The Aussie dollar has been trading blows with the greenback for superiority recently, and has favourable rates with most currencies across the world, but marketers probably won’t see a change in business until next year.
“There haven’t been any major changes yet,” Starcom’s investment director Melissa Hey tells Marketing magazine. “We haven’t seen massive cutbacks or increases, I think it’s more going to affect next year, once the market settles and global companies decide their budget allocations.”
Hey says that even if US budget allocations to Australian media buy fall in response to the Australian dollar, media agencies will remain unaffected.
“If the American companies did our budget percentage allotment based on a .85 exchange rate and it rises to .95, and then they only decrease the budget by ten percent, we’re still in a good position.”
Simon Chard, Business Director at OMD, agrees that the industry hasn’t felt the effects of the strong dollar yet and that Australian markets won’t get a lesser cut of marketing promotion, but globals will soon discover that their investment won’t go as far.
“If it’s a global account, their budgets are often dictated by the US or the Euro, in both cases they’re being disadvantaged,” he tells Marketing magazine. “The have planned, in some cases, to a 60 cent US exchange rate, it’s almost halving their budget here in Australia. It’s not as though the head office will give Australian campaigns double the money, it will just buy half the amount.”
“It may be a question that they wouldn’t be able to do their campaign to the degree they wanted. A client that may have a $2 million budget, that would have previously bought you three to three and a half million not that long ago, but today it’s only going to get you two million. You may be going from a press and TV schedule to just press. The ability to do multi-channels will be affected, you wouldn’t be able to cover each platform properly.”
Chard also predicts the industry to feel a change come budget allocation early next year.
“I think for media sellers it will certainly tighten the dollars, and media planners are going to have to reduce their channel selection. That’s going to have a dent in sales.”
However, Chard says he’s not too concerned about the industry looking in to next year.
“I’m not at all worried yet. The market is up 18% this year and we’re predicting more growth next year.”