Advertisers prune ad spend by £115m in first half of 2008

The UK's leading advertisers pulled nearly £115m of ad spend in the first half of 2008, as the credit crunch began to bite, with TV and press bearing the brunt of clients' ad cutbacks.

Analysis of Nielsen ad spend data - provided exclusively to Media Week - for the first half of this year and the first half of 2007, across the five major product categories of motor, finance, food, entertainment/media and drink, shows that finance and food clients reined in ad spend more than any of the five product groups during the first half of 2008.

And while those media owners and media agencies surveyed by Media Week believe the rate of ad spend decline will not be as deep in the second half of 2008, ad spend is expected to be down again year on year.

Ad spend on finance and food products fell by 7.5% and 8.2% respectively, year on year. The combined reduction of ad spend by all five product categories across cinema, online, outdoor, press, radio and TV totals £114.5m.

TV, with a £34.7m year-on-year decline in ad spend across the five product categories, and press, with a £27.96m year-on-year decline in ad spend across the five product categories, have suffered most.

Referring to a 12.4% year-on-year decline in food ad spend via press, Richard Webb, Mirror Group managing director, said one factor was "that food manufacturers are contributing to supplier-funded supermarket activity, which is substantially up year on year, and reducing brand support. We believe this will continue for the rest of the year".

Andy Atkinson, director of sales, IDS, warned that finance, plus motors, will "be under pressure for the rest of the year" for TV. "We expect the TV market will be down by 6% year on year in the second half of 2008," he said. "Financial and motor are the categories that are hurting TV."

Radio ad spend fell £10.2m, with four of the five product categories pulling spend out of the medium.

John McGeough, trading and business development director at GCap Media, said: "April and May were very poor for radio, which coincided with when the credit crunch really hit."

Outdoor has also suffered: the sector pulled in £19.8m less in ad spend from the five advertiser categories year on year, with food ad spend via the medium down 60.9%.

Rob Atkinson, managing director UK at Clear Channel Outdoor, said: "A couple of major food clients haven't spent much this year because of the market moving against them. That means companies are moving more short term and tactically."

One bright spot for outdoor was the 51.6% surge in ad spend from finance clients. Another rare bright spot was the performance of online and cinema, with both increasing the amount of ad spend they pulled in from the five categories, by £13.9m and £12.4m respectively.

Mike Hope-Milne, Pearl & Dean enterprise director, said: "We've introduced new initiatives like alternative content when we screen live concerts, or Bluetooth downloads in foyers, both of which have opened the doors to other advertisers and agencies."

HOW AD SPEND CHANGED FOR DIFFERENT MEDIA
Cinema: Total (up) £13.82m
Radio: Total (down) £10.4m
Outdoor: Total (down) £19.8m
Press: Total (down) £28m
Internet: Total (down) £33.8m
TV: Total (down) £34.7m

Data refers to year-on-year change in ad spend across the five product categories during January to June 2008, compared with January to June 2007. Source: Nielsen

FOOD: -8.2% - Spend totalled £334.7m in the first half of 2008. Increases in cinema (132.6%), offset by drops in press (-12.4%), TV (-0.78%) and outdoor (-60.9%)

MOTOR: -0.04% - Spend broadly flat at £439.4m this period

FINANCE: -7.5% - Spend down to £766.3m with the credit crunch hitting banks' willingness to provide credit products

ENTERTAINMENT/MEDIA: -4% - Spend down because, in 2007, Sky, Virgin and Setanta were locked in a price war

DRINK: 0.98% - Spend up from £179m to £180.9m. Drink clients cut spend from radio (-28.5%), cinema (-30%) and press (-11.3%)

Data refers to ad spend across radio, cinema, outdoor, press, TV and online from January to June 2008 compared with January to June 2007. Source: Nielsen.




Source: Media Week