Indiantelevision.com Team

(20 January 2009 8:00 pm)

MUMBAI: While the tremors of the global financial crisis in mid-2008 impacted almost every industry and every region, overall global ad markets held on to growth in the quarter from July to September 2008 (Q3), in newspapers, magazines, TV and radio, according to Nielsen’s global advertising trends report, Global AdView Pulse.

In the three months till September 2008, the global advertising market posted a 2.9 per cent increase versus the same quarter in 2007, mostly driven by the Asia Pacific region (+7.8 per cent).

North America’s advertising market managed to bounce back to positive growth, up 3.1 per cent, bolstered by the Olympics and the run up to the elections; however, Europe saw a drop in overall ad spend (-5.9%).

Within the Asia Pacific region, the strong results were largely driven by China (16.9 per cent), Indonesia (16.7 per cent) and Hong Kong (13 per cent). Leading the advertising growth in their own region, these three markets were also the fastest-growing advertising spenders globally.

Q3 2008 saw the Asia Pacific region surpass the US to become the largest contributor to global advertising spend, accounting for 39.3 per cent of global advertising dollars, up two per cent, states the study.

Although six of the 10 European countries covered in the Nielsen Global AdView Pulse report saw growth in the latest quarter, the region as a whole recorded a drop of 5.9 per cent, primarily as a result of retracted advertising spend in Spain and Turkey. Driven down by its deepening economic crisis, Spain saw declines of 22.3 per cent in Q3 2008, while Turkey’s ad spend plummeted by 37.3 per cent.

Global AdView deputy MD Michele Strazzera says, “Many of the countries covered in the report appear to have been weathering the early tremors of the escalating global economic crisis."

“In Europe, however, advertisers appear to be taking a more cautious approach, with the effects of existing economic challenges taking their toll on the region’s ad spend, particularly in Spain and Turkey,” Strazzera adds.

Among the four major media types, television and radio are benefiting most from global advertising growth. Print media, however, lost almost two percentage points to television in the year-to-date media share of spend.

Television enjoyed overall growth of 8.1 per cent in the third quarter of 2008 compared to the same time last year, though it experienced negative growth in Europe (-6.6 per cent). Radio growth remained fairly stable in North America and Europe, while clocking up 9.7 per cent growth in Asia Pacific, resulting in an overall increase of 2.1 per cent.

Newspapers and magazines saw declines in the more mature markets of US and Europe, but continue to grow in the Asia Pacific region. On balance, advertising activity in these media has decreased, with magazines down six per cent globally and newspapers down 3.8 per cent in the quarter.

By sector, automotive has experienced the highest reduction in media spend. In response to the worsening global economic situation, the high price of oil and the credit crunch starting to show its effects, both the automotive and financial sectors have reduced advertising spend (-6.9 per cent and -2.2 per cent respectively).

According to the Nielsen study, all other sectors have been increasing their advertising activity in the quarter from July to September 2008. Distribution channels had the largest increase in media spend, up 13.6 per cent in the year to September, while entertainment was up 10 per cent and clothing and accessories and healthcare both grew by 7.6 per cent.

Sector growth by region was more mixed – automotive and media were the only two sectors declining in Asia Pacific (-2.6 per cent and -2.1 per cent respectively), distribution channels and entertainment saw growth everywhere, telecommunications are growing mainly in Asia Pacific (7.9 per cent) but are stable in Europe (0.5 per cent) and only slightly declining in North America (-1.1 per cent).

The FMCG and healthcare sectors are investing more than the previous year in both North America (1.4 per cent and 4.1 per cent respectively) and Asia Pacific (9.7 per cent and 10.8 per cent respectively), while they are showing a decline in Europe (-5.7 per cent and -1.8 per cent respectively).

Although automotive saw the biggest drops in advertising spend in the latest quarter, seven of the top 20 largest global advertisers identified in Nielsen’s report were car manufacturers. Other companies to make the top 20 list included healthcare and beauty companies, telcos, food and beverage manufacturers and retailers and companies from the entertainment sector.

Strazzera adds, “There is fairly strong evidence showing that companies which increase their ad spend in a financial downturn experience exponential increases in their ROI. With the full effects of the financial meltdown having been felt in Q4 2008, as results from this quarter come to hand it will be interesting to see the impact on the ad industry.”