Adspend has been on media minds since Cabinet spokesman Jimmy Manyi announced he was taking control of government’s whopping R1-billion per annum adspend. Many newspapers earn a fortune in advertising income from government business. But what is the outlook across other advertising channels? Media buying agency, Media Shop, recently answered that question when it revealed in the first quarter’s figures in its ShopTalk newsletter.
TheMediaOnline caught up with managing director, Virginia Hollis, to find out more.
The good news is that total adspend for the period January-March 2011 is up by 17.73% compared to the same period last year, with a total of 935 307 being placed. The direct mail category has declined and out of home experienced the smallest growth.
“Direct Mail is made up of knock and drops as well as unsolicited mail to post boxes. The first quarter of the year would naturally have fewer knock and drops as these advertisers are coming off the back end of Christmas,” Hollis explained.
“The drop off could perhaps not be as big as depicted as apparently not all media owners submitted their figures over the period in review (advised by AC Nielsen). Added to this is online. Newsletters, special offers, catalogues are now sent digitally and it obviously costs considerably less so it is far more cost effective. Of course this only works for the people who have access to computers.”
ShopTalk noted that the greatest growth was recorded by cinema advertising. The increase, it says, has stemmed from increased advertising rates. Cinemark’s packaged deals have gone from a 12 month package option to now three or six month options as well, which has resulted in different package rates.
“Adspend figures for cinema only reflect the adspend of Cinemark and some independents. PopCorn/Cinevation do not submit their figures. In consultation with one of the media owners, there is definitely an increase in new advertisers in to this media type, and they are not the big spenders.
“What’s made it more affordable is digital. More and more cinemas have converted to this format, which means no BIG production costs. And quite frankly it is a great advertising medium – completely captive audience (they can’t chat to their mates, or dash off to make a cup of tea),” Hollis said.
The package costs have also been impacted on by the fact that the 35mm film and digital options for material has now been extended to include 3D screens. The cost of the 3D screens is higher due to the technical requirements.
Hollis said there around 10 3D cinema advertisers at the moment. “Contrary to belief, the production costs of 3D are not as exorbitant as expected,” she said. “There is the general feeling that the production costs are high and perhaps many creatives are not willing to venture into this unknown territory at the moment.
“Many 2D executions are being used in the 3D cinema’s to follow 3D movies – and the number of 3D movies is ever increasing. The film industry seems to be more advanced in this respect. More details for the ‘challenges’ needs to be investigated with the production houses and the creative’s. The launch of Avatar saw the big upswing in audience numbers and of course, the higher ticket prices brings in higher LSM groups to the cinemas.”
While adspend in the first quarter looked good, MediaShop is not too sure that the trend will continue into the second quarter. ShopTalk recorded that media owners commented on the fact that the industry had quietened down since April “as the wave of the World Cup” came to an end.
It noted that there are many “special deals” on the table to entice advertisers to spend more of their budget. These are good for those clients with ad hoc budget allocations, however where budgets have been committed or have been cut back, special deals are not going to help in getting more money.
“The highs of 2010 WCS have obviously changed the entire 2010 adspend trend and one shouldn’t compare the next quarter adspend to 2010 in any case. A better comparison would be 2009 and this we will do for the next adspend review when the data is available,” said Hollis.
“Our projections, and feedback from some marketers, are that adspend will not pick up over the next quarter, and in all likelihood we will see a plateau in spend but we will hopefully see an upswing in the fourth quarter of 2011. Feedback we’ve received from a number of media owners confirms this. We know that the traditional end of year demand will always be there and we believe that most advertisers are holding back. Well, we hope that is the reason!” she said.
With all the special deals and discounts out there, is there a risk that this sort of ‘ad sale’ could be counter productive in the long run? “In essence we don’t believe that special deals are counter productive at all. Everybody should be able to put a great deal down on the table to entice a client to spend their budget,” said Hollis.
“However, what is happening is that the special deals continue to become ‘more special/cheaper’ every month. What this is leading to is clients holding their budgets back because they know they are going to deal. We all know that the advertising budgets are under pressure and the media owners all have targets to make, but it seems like the standard rate cards (in a couple of instances) are being thrown out of the window,” she explained.
And concluded: “ So one has to ask the question … What happens when the economy turns? At what level will the media owners then peg their standard rates? The media owners need to be mindful of this, and whilst we all love the deals now, they need to consider the future. Continue with the special deals but don’t fall into the trap of giving away the farm in the interim…”
Follow MediaShop on Twitter @MediaShopZA
Want to continue this conversation on The Media Online platforms? Comment on Twitter @MediaTMO or on our Facebook page. Send us your suggestions, comments, contributions or tip-offs via e-mail to email@example.com or firstname.lastname@example.org