FYI | Apr 06 2006
The media industry is all about advertising, and growth in advertising spending, as it has long been recognised, is slowing to a crawl. It is no surprise that ad spend in traditional media is dropping, but even new media has not increased enough to stop the rot. Does this actually mean companies are spending less on advertising?
UBS reports ad growth is estimated at 7.4% for 2005 (UBS tipped 8%+). Take out pay-TV and on-line, and ad growth was only 4.8%, with a dismal figure of 1.6% for the second half. These numbers are well below 10-year averages.
Not surprisingly, online ad growth continues unabated, UBS reporting 61.3% in the first half and 58.7% in the second. Yields on classifieds, the analysts note, were significantly higher than in 2004. TV was slowest at 0.2%, but pay-TV made a significantly higher contribution (albeit it is only up to 5% of the total TV pie), suggesting FTA TV is on a bet to nothing.
Since the first half of 1995, notes UBS, newspaper share of advertising has fallen from 45% to 36.3%.
UBS makes the point that Australia’s advertising spend as a proportion of GDP is actually higher than global peers. At 1.33% in 2005, this figure even grew from 1.25% in 2004. This is surprisingly slightly above US proportions, which might go some way to explaining why we seem bombarded by advertising.
However, to return to my thesis, I find it hard to believe corporations are simply deciding to spend less to market their products. While the transition from old to new media is becoming stark, the overall numbers aren’t increasing. I suggest this is because corporations are finding ever newer (and sneakier) ways to advertise.
Think viral marketing (praising a product in a chat room), fake blogs (Coke Zero), product placement (Desperate Housewives leads the charge) and who knows, perhaps other little tricks we don’t even realise. I’m not sure how much of the “spend” is captured in traditional data. It does, however, hark back to the fact that traditional media is rapidly becoming anachronistic.