Australia’s big banks sharply cut back their advertising for home loans

The huge rise in official interest rates during 2022 and 2023 appears to have prompted Australia’s major banks to sharply cut back their advertising of mortgage products.

Think TV CEO, Kim Portrate: ‘It has been a challenging 12 months for advertisers, broadcasters, and consumers alike, which is reflected in these figures.’ Picture: Britta Campion

The huge rise in official interest rates over the past 18 months has taken a significant toll on home loan advertising by major banks.

Research conducted for The Australian by industry “bible” Standard Media Index shows that bank advertising in the home loan area has largely been on the decline since official interest rates started rising last year.

For the three months to June 30, SMI numbers show home loan advertising was down 12.5 per cent.

The news comes as further industry numbers also show that the entire free-to-air TV industry has seen a sharp drop in advertising across metropolitan and regional areas, only partially offset by a rise in broadcast video on demand (BVOD) advertising. For the year to June 30, the total free-to-air TV advertising market fell 7.9 per cent to $3.6bn, according to industry body ThinkTV.

The fall in home loan advertising during the June quarter has not been a one-off in a rising interest rates climate. For the entire 2022 calendar year, the period in which interest rates started to skyrocket from May onwards, home loan advertising was down by 13.8 per cent compared with the 2021 year, when official Reserve Bank interest rates had been at historical lows of 0.1 per cent for the entire period.

SMI’s Asia-Pacific managing director Jane Ractliffe believes the lower volumes of home loan ads appear to be a direct result of the current interest rate environment:

“The double-digit decline in the value of ad campaigns promoting home loans looks to be a direct consequence of the current higher interest rate environment, with banks and other providers seemingly more reluctant to promote mortgages at the current higher rates,’’ she said.

“Home loans is the second largest subcategory within SMI’s banking category and its decline is the main reason the banking category is reporting a 3.1 per cent fall in ad spend in the second quarter.’’

The SMI boss said there was some anecdotal evidence that the banks might be starting to pick up some of their more general brand advertising.

It has been noticeable, for example, during the FIFA Women’s World Cup that the Commonwealth Bank has anecdotally been running more advertising about its financial support of Australian women’s soccer, particularly showcasing its sponsorship of the Matildas during the World Cup coverage – although any pick up won’t show up until the SMI 2023 third-quarter numbers.

During the 2022 calendar year, while home loan ads were in decline, bank ads that promoted their sponsorships, particularly in sport, rose by 5.4 per cent.

Apart from the Matildas, CBA is also a high-profile sponsor of the Australian women’s cricket team, which was showcased in the recent women’s Ashes series in England.

Meanwhile, the free-to-air TV industry had its toughest ­period for advertising turnover for some time, with metropolitan TV ad revenue falling 10.6 per cent to $2.53b for the year to June 30.

ThinkTV CEO Kim Portrate acknowledged the significant headwinds facing the industry: “It has been a challenging 12 months for advertisers, broadcasters, and consumers alike, which is reflected in these figures,” she said.

Portrate has talked up the small silver lining for the industry: rising BVOD revenue at the three main commercial free-to-air platforms, 7Plus, 9Now and 10 Play. FTA streaming platforms saw a collective rise in BVOD revenue by 6.1 per cent to $391.67m for the year to June 30.