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Advertising spend rising in 2010

Based on reports from several large markets like UK, Germany, France and Italy the recession of advertising spend seems to be over in the first part of 2010. The main drivers for growth are TV- and web advertising. Major increases in spend on social media have also been reported.

The trends amongst major advertisers seem to be to focus on innovation and advertising and cutting back on promotional activities. Kraft and Unilever are good examples of this trend.

The increase in advertising spend will most likely increase media price inflation in most European countries. Some reports of sold-out situations on TV have been reported and this normally increases media inflation.

Rising trend in the Nordic countries
The same trend as in the larger European countries can be observed in the Nordic countries, but it seems like the four countries are moving with a different pace. In both Sweden and Norway demand increased dramatically already in Q1 especially on TV and web. In Sweden sold-out situations occurred already early in the year, in Norway the situation appeared slightly later. The sold-out situation was not only a TV-issue even radio were in periods sold-out.

The situation in Finland and Denmark is somewhat softer. Denmark who was probably worst hit by the recession experienced media deflation figures of a magnitude which has not been seen before in 2009, and prices have declined even more through 2010. The latest figures for Denmark in 2010 also reports and increase in demand for TV and online compared to 2009, but here it is important to remember that we compare to the very soft 2009. Finland is placed in the middle of the road but is definitely closer to Denmark than to Sweden and Norway. Media spending has increased during the first half of 2010 with TV and web taking the majority but real sold-out situations are not an issue here.

By Morten Funch, Senior Media Advisor at Marketing Clinic and Media Manager at Coca-Cola Nordic & Bengt Lindström, Senior Media Advisor at Marketing Clinic

Below some extracts of recent news about advertising in Europe:

 

MARKETING BUDGETS SET TO RISE IN UK
More than 75% of marketers in the UK plan to either maintain or increase their expenditure levels during the second half of this year.

The Marketing Society, the industry body, worked with the Royal Mail, the postal services provider, to survey over 100 of its members, all of which are senior client-side executives.

Some 33% of respondents predicted budgets would expand in the closing six months of 2010, and 54% expected to follow the same pattern of investment as at present. By contrast, only 13% of participants forecast a decline in communications support during this period.

 

AD SPEND LEVELS UP BY ALMOST 5% IN ITALY
Advertising expenditure levels increased by almost 5% in Italy during the first half of this year, with the food, beverage and telecoms industries among the main drivers of this trend.

According to figures from Nielsen, the research firm, ad spend in the country climbed by 4.7% year-on-year in H1 2010, to %u20AC4.5bn ($5.9bn; £3.7bn) in all.

This included an uptick of 9.7% in June, with the start of the FIFA World Cup in South Africa - a time when many marketers sought to connect with male consumers.

By media, television saw revenues jump by 7.3% in the first half compared with the same period in 2009, and was also the channel that "benefited most from the World Cup." Radio recorded an improvement of 14.8%, a total which stood at 14.6% for the web, 7.3% for digital outdoor, 4.5% for direct mail and 3.8% for traditional out-of-home formats such as billboards and posters.

Elsewhere, newspapers and cinema remained largely flat with expansions of less than 1%, while magazines and free press titles registered contractions of 9.1% and 8.2% respectively.

 

KRAFT BOOSTS AD SPEND, CUTS PROMOTIONS
Kraft, the food group, is planning to increase its ad spend in the second half of 2010, and will not "tolerate" the widespread use of promotions to enhance its position.

"Our focus has been and will continue to be on advertising and marketing investments that will build our brands for the long term," said Irene Rosenfeld, the company's chief executive.

Kraft's "priority brands" - which include Kraft Singles, Philadelphia cream cheese and Velveeta processed cheese - received a considerable share of its expenditure in H1 2010.

Among the other ranges that have benefitted from recent successful campaigns are Capri-Sun and Kool Aid soft drinks, as well as Maxwell House Coffee.

Elsewhere, Tang and Oreo delivered growth of between 30% and 40% in a number of emerging nations due to effective advertising and communications initiatives.

"We continue to move our business toward our ultimate endpoint of 8% to 9% of revenue in A&C," Rosenfeld said.

 

TV, ONLINE AD SPEND SET TO RISE IN GERMANY
Television and internet advertising expenditure will improve in Germany this year, according to two new reports.

Estimates from the VPRT, the trade body for the country's commercial broadcasters, suggested that TV adspend should climb by 4% in 2010 to %u20AC3.52bn ($4.5bn; £3.0bn) in all.

These results were based on a survey of the organisation's members, and also anticipated that radio would generate an uptick of 2.3% to %u20AC506m.

Elsewhere, analysis by Bitkom, which represents the digital marketing sector, and Thomson Media Control, the research firm, said online display advertising sales increased by 28% to %u20AC912m in the first half of 2010.

Companies in the telecoms, media and entertainment and financial services industries were among the main drivers of this trend, with demand likely to remain resilient going forward.

 

AD SPEND LEVELS RISE IN FRANCE
Adspend levels are continuing to increase in France, as brands in a range of categories heighten their investment. According to figures from Kantar Media, the research firm, total advertising expenditure through TV, print, outdoor and cinema rose by 17.3% to %u20AC1.63bn ($2.8bn; £1.91bn) in May 2010.

Television remained the dominant choice among marketers, having attracted 39.3% of traditional media budgets during this period. Press followed in second on a share of 27%, having seen double-digit upticks in both value and volume terms, with radio in third on 19.2%, having also witnessed a surge in demand. Outdoor received 13.4% of marketers' investment in advertising, with cinema on a modest 1.1%.

Looking to the web, financial services providers were most interested in this medium in May with an outlay of %u20AC29m, ahead of the travel industry on %u20AC26.8m and automakers on %u20AC23m.

Almost every major sector boosted its media activity in the fifth month of this year, with food brands delivering almost one third of overall growth, directing the largest portion of this incremental spending to TV and online.