Largest-ever decrease in ad spend predicted for ’09

8Dec08

Source: Nikki MacLennan, Adnews.com.au

National advertisers are predicting a 2.4% decrease in above-the-line ad spend for 2009 – the biggest decrease ever predicted, according to Starcom MediaVest’s annual Media Futures report.

Only 12 months ago, advertisers predicted their budgets would grow by 7.3%.

Starcom’s report, launched in 1985, paints a bleak but “unsurprising” picture for advertising spend in 2009, said CEO John Sintras.

The November survey was conducted among a sample of Australia’s top 400 advertisers and key senior media executives from free-to-air and pay TV, newspapers, magazines, radio, out-of-home, cinema and the internet.

Sintras said while consumers would have more money in their pockets thanks to interest rate cuts and falling fuel prices, it was unknown whether how or whether they would spend.

Only one in three national advertisers plan to increase their above-the-line budgets next year – the lowest proportion to predict growth in ad budgets since surveys began. One third predicted a decrease in their ATL budgets for next year.

In contrast, below-the-line media is expected to perform strongly next year, with national advertisers planning to increase their BTL budgets by 6% in 2009. Point-of-sale, PR, and email campaigns continue to be the most highly-used channels for over two-thirds of national advertisers.

The report found the internet would show the strongest growth, with almost six in 10 national advertisers planning to increase their internet advertising budgets in 2009.

Internet usage overtook free-to-air usage by advertisers for the second year running, with nine out of 10 using digital channels; however, free-to-air also remained a cornerstone, with eight in 10 including it in their campaigns.

Fewer than one in five advertisers plan to increase their magazine, radio or subscription TV ad budgets next year; while only one in 10 expect to increase spending in newspapers. Cinema and out-of-home are expected to maintain steady expenditure.

Media executives forecast 1% growth rate in advertising in 2009 – the lowest in seven years, and a sharp drop from the 5.9% growth rate predicted for 2008.

More than two in five media executives said their sales revenues in 2008 had not met the expectations set at the beginning of the year. Newspaper executives were the least optimistic about the year ahead, with six in 10 predicting decline of up to 4% in newspaper advertising expenditure for 2009. Internet executives were more upbeat, predicting budget growth of more than 10% for their own medium next year.

In another survey, ZenithOptimedia’s latest global forecasts, also released today, predicted global ad spend would decline by 0.2% in 2009. The figure is revised from the media agency’s previous forecast of 4.0% growth, thanks to the fallout from the global financial crisis. ZenithOptimedia revised its Asia-Pacific ad expenditure growth for 2009 forecast, down from 5.2% to 3.2%.

The report forecast strong growth in internet advertising globally, predicting 18% growth next year, and substantial growth for both cinema and out-of-home. Television is also expected to perform strongly, reaching a record 38.5% share of global ad spend in 2010 and 2011, as consumers seek low-cost escapism in a period of economic downturn.

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