PARIS: Not long ago, European advertising executives seemed confident that they could ride out the storm in the U.S. economy and the global rise in food and energy costs.
Now, they and the media owners who rely on their business are worried that European marketers will slash ad budgets, as many of their counterparts have already done in America.
"Definitely, if our clients suffer from higher petrol costs, spending is going to be affected," said Valérie Accary, president of CLM/BBDO, an agency based in Paris owned by Omnicom Group. "So far we haven't seen it, but the second half is a big concern."
Zenith Optimedia, a media buying agency that is part of Publicis Groupe, recently downgraded its forecast for ad spending in Western Europe, saying it would grow by 3.7 percent this year - barely more than the inflation rate. That is still better than the 3.5 percent growth expected in North America, but a reduction of two-tenths of a percentage point from the previous forecast, issued only three months earlier.
That may not seem like a large revision. But the new numbers mask bigger shifts in spending, as advertisers allocate more of their budgets to the Internet, cutting their allocations to broadcast and print advertising.
"If you're in some of the traditional media in Western Europe, you're not going to see much growth over the next year or so," said Jonathan Barnard, head of publications at Zenith Optimedia in London.
Among the big European markets, analysts say Britain and Spain may be most at risk, as their economies slow sharply in response to housing slumps. France and Italy are also showing softness, while Germany is holding up after a wobble early this year.
For some individual media owners, feeling the combined effects of the shift to the Internet and the economic downturn, an ad recession has already arrived. Trinity Mirror, a British newspaper publisher, said last month that advertising had fallen 12.6 percent in May and June, following the recent gloomy reports of some American newspaper companies.
Analysts at Citigroup last week issued a warning about advertising prospects for several big European television broadcasters, including ITV in Britain and ProSiebenSat.1 in Germany, causing jitters among investors in those companies.
While some analysts had speculated that marketers would reduce spending on the Internet in a downturn, deeming it experimental and nonessential, the opposite seems to be happening. In Britain, for instance, Internet ad spending will rise 32 percent this year, according to Zenith Optimedia, a sharp revision from the agency's previous prediction of a 26 percent gain.
Internet advertising is benefiting because it allows marketers to track the effects of their spending, something that is more difficult to do in other media. Agencies that create advertising, like CLM/BBDO, are feeling the effect.
"Clients are saying, 'We don't want big ideas, big projects,"' Accary said. "It's about messages that are effective and right to the point."
Along with the Internet, faster-growing developing markets are also gaining a growing share of multinational marketers' ad budgets. Barnard, who recently cut his estimates for U.S. and Western Europe ad spending, also raised the forecast for outlays in the rest of the world. Outside those two regions, spending will grow 11.8 percent this year, up from a forecast of 11.1 percent in March, Barnard said.
Simon Rothon, senior vice president of marketing services at Unilever, the British-Dutch consumer products company, said during a recent gathering of the advertising industry in Cannes that the company had been doing some "focusing of resources" on emerging markets, even as it held overall marketing spending steady through the first quarter.
For Europe, next year was already shaping up as a potentially weak year for advertising, without the stimulative effect of big marketing events like the Euro 2008 soccer tournament. Now some executives fear that all the talk of an advertising recession could turn into a self-fulfilling prophecy.
"It's not a disaster yet, but we keep hearing that it may be," Accary said. "Maybe it will be a disaster just because everyone is saying it will be a disaster."
http://www.iht.com/articles/2008/07/13/business/ad14.php
IW: My emphasis in bold, not that the article needs it.
www.aplaceintheauvergne.blogspot.com
www.ianwalthew.com
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment