The MediaShop, in its Shop Talk newsletter, recently released a wrap of 2011’s ad spend figures, and they looked better than anticipated. Over R32 billion was spent, and that excludes self-promotion. This is an 11% increase over the same period in 2010.
“First and foremost, both cinema and radio have had changed in the way that their ad revenue has been tracked. This has definitely had a positive impact on the overall ad spend as it is more reflective of the real figures,” says associate media director, Trish Guilford.
“Whilst perhaps many wouldn’t believe it, there are advertisers who have increased ad spend tremendously! Unilever, for example, increased their spend from R892 million in 2010 to R1,290 billion in 2011. This was a massive 45% increase in ad spend. SAB increased from R547 million in 2010 to R816 million in 2011 – a 49% increase.
“There are definitely advertisers out there who are looking at SA with very positive attitudes and are putting huge money behind their campaigns.”
One sector that showed deep declines was direct mail, once a stalwart of advertising. Guilford says there has been a “constant decline in direct mail for the last couple of years as many advertisers have realised that time have changed and doing mail shots don’t work. The likes of digital/internet has a much better ROI when trying to reach specific consumers”.
Online advertising reflected a growth of 29.98%, something Guildford believes will continue. “We are coming off such a small base that we will no doubt continue to see double digit increases for a good couple of months and years. The growth can be attributed to two factors: a) more advertisers are using online and current advertisers are spending more; and b) the more demand there is on the medium, the more pressure there will be for the media owners to supply their ad spend data for capturing.”
A surprising statistic was the 6.43 percent growth in print advertising while the sector has shown a decline in circulation. But Guilford says we “need to remember that the ad spend reflected is based on flat rate – no discounts are taken into account and free insertions or added value is costed. If the real spend was reflected we have no doubt that it will be a lot less.”
She says the cost of print – paper and printing costs – increase annually and that these costs are passed onto the advertisers. “Depending on their target market, they will either accept the increases or negotiate for a much higher discount to continue their support,” she says. “Yes, the declining circulations are most definitely taking their toll and advertisers are wise to this. The impact is being felt too.”
Not so surprising was the massive upward movement of self promotion Was this to drive ad spend? To what do attribute this ‘investment’?
“The answer is two fold,” says Guilford. “The stations / print titles have to advertise themselves in order to keep viewers/listeners/readers true to their offerings. The likes of TV where we have a number of channels to choose from, once you are watching M-Net/DStv/etv or SABC – they would rather you stay on their channels that switch over. The electronic media also have unsold inventory that they need to fill. Can you imagine how many channels would run 10 – 20 minutes early due to no advertising breaks?
“Secondly, why should the media owners pay for advertising when they can use their own channels and not pay a cent? In the long run, they are sitting in the pound seat as they are saving themselves fortunes of money.”
Community media is looking good. “We all know there is a strong drive from parliament to get government type advertising to spend a large percentage in the community media offerings. We have no doubt that over the next couple of months we will probably see more going into the community media,” says Guildford.
“But there are a number of advertisers that we have in MediaShop that are adopting localised/community campaigns. Eskom have a strong drive in ensuring that local communities are made aware of activations and service issues. Education institutions are adopting localised campaigns to promote their offerings, registration deadlines etc. The casinos are extremely good at doing localised campaigns to entice their immediate catchment areas to support the casino’s and entertainment offerings too. However, most community stations cannot/will not accept any advertising from casinos, the same applies to alcohol.”
Overall, Nielsen’s is predicting growth each quarter this year. But Guilford said while this prediction is based on historical growth trends as well as current market conditions, the impact of the massive petrol price increases has not been factored in.
“This will no doubt affect those advertisers who have to deliver their products and services,” she says. “Unless they can increase sales to cover their costs, the marketing budgets may be affected.”
There is a debate globally as to whether or not the printed formats of newspapers and magazines will give way to digital formats. Based on this thought, The MediaShop took a look at the breakdown of South African advertising support of these media types. The table above reflects the adspend figures, excluding self promotion, for the printed media titles.
Nielsen’s ad spend predictions for 2012, based on 2011 quarterly ad spend? Quarter 1: Up 4%; Quarter 2: Up 5%; Quarter 3: Up 7%; Quarter 4: Up 6%
And finally, some interesting facts.
- The Top 10 radio stations are responsible for 69% of the total radio adspend for 2011.
- Internet is up by 30% overall, but still only accounts for 2% share of voice (SOV)
- The Top 10 TV channels are accountable for R10 million of the total R14 million adspend.
- Unilever spend increased by 45% year on year. Their 2011 adspend topped R1.290 billion of which 57% of their adspend was spent on TV.
- The brands which spent the most money was Pick n Pay at R551.48 million followed by Checkers at R360.31 million and Shoprite at R304.16 million
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