Nielsen: Ad industry set for recovery
The UK is finally set for an economic recovery following six consecutive quarters in recession, according to a new report by The Nielsen Company to be released next week, but consumers are changing their spending habits too.
The upcoming “Reading the Recession” report is expected to identify signs of a recovery as the decline in many markets slows down, including advertising.
Nielsen state that the rate of decline in ad spend has consistently slowed as a number of leading brands have shown year on year quarterly growth for the first time in 12 months. Total ad spend was down 10% in September 2009 compared to 16% in May 2009.
When the downturn first hit, a few companies tried to spend their way through it. The UK’s leading supermarkets invested in “value” advertising promotions, encouraging people to consider the cheaper options, with Asda’s ad spend increasing by a significant 40% between July 2008 and June 2009.
Government agencies spent heavily too (COI up 33% for the same period) with campaigns such as the ‘help protect against the spread of swine flu’. There is of course concern that a new Conservative government would spend less freely next year, knocking any revenue recoveries elsewhere in the market.
Nielsen’s report also shows that travel and cosmetics advertising budgets have remained relatively unscathed during the downturn.
At the other end of the scale a number of companies have cut advertising spend hugely – internet firm Tiscali (92% down over July 2008-June 2009) is the stand-out figure, for example; and other notable businesses quoted include Lexus (down 66%), Toyota (57%) and Procter & Gamble, whose 15% reduction is equivalent to £28.6 million.
Among high street retailers, the advertising vehicle of choice has also seen some changes – Nielsen report shows that PC World has withdrawn significant volumes from press, while M&S has dropped outdoor and re-directed spend into press. Wickes has focused its spend on TV.
In the financial sector, the life-assurance companies such as Zurich, AXA and LV are all increasing spend as they transform into consumer-centric businesses.
Nielsen also reference the recent results of their consumer confidence survey: “During Q3 2009 UK attitudes and spending habits were beginning to change. Two-thirds of consumers planned to spend less on clothes, compared to 71 percent from the previous survey conducted in the first half of 2009, meanwhile those looking to save on gas and electricity bills fell from to 68 percent to 59 percent in Q3 2009.”
Nikki Williams, UK managing director of Nielsen’s Media division, summarises: “Despite some confidence returning, a legacy of the recession will be the desire amongst consumers to continue to spend less on both grocery bands and financial services products. Many leading brands have adapted well to this change in consumer behaviour to date, but the real test will be how they cope with this intent long term.”