Hard times not over yet for sector -- but opportunities await savvy advertisers
LAST year was not a good one for nearly all businesses, and advertising was no different to every other sector. The demise of McConnells was perhaps the story that made the most headlines, but media suppliers suffered to differing extents across the board.
Now 2011 looks like being another difficult year and one of real change in the sector. With increasing pressure on businesses, good-quality media planning, strategic work, and buying to the wider marketing community are becoming more and more important, says Mindshare's Andy Pierce, who points out that a reported increase in ad-spend figures in 2010 only tells part of the story.
"While it's true ad-spend figures grew in 2010, ad spend is a measure of rate card value, rather than real media investment, so the figures are slightly misleading. Market intelligence actually suggests slight to modest decreases in ad revenue across most media channels, with the real story being one of advertisers continuing to force down rates from media suppliers," he says.
Despite that, Mr Pierce believes there is still value in the market, but only for the quick-thinking.
"Deals will still be available in 2011 for the more nimble advertiser, but much of the value has been squeezed from the market. The year 2010 also saw greater consolidation in terms of advertising spends, with eight of the top largest categories showing a year-on-year increase in spends.
"The exceptions have been food, transport and travel, while retail, finance, and telecoms have all recorded strong growth. The net impact of both this consolidation and spend increase is the increasingly more pronounced developments of micro-markets within each sector," says Mr Pierce.
"The retail market is a prime example of one of these markets. Although the sector is broad, Nielsen figures show its €234m spend in the 10 months to October was a slight increase year-on-year.
"The reality is that the bulk of this spend comes from grocery, furnishings, department stores and electronic retailers. Grocery on its own accounts for some €71m.
"The highly competitive nature of this market is further compounded by its extreme bias towards print, with nearly 80pc spent on press advertising.
"Even though the medium is typically over represented in ad-spend figures, this is still an extremely heavy proportion.
"The net impact is putting pressure on advertisers and media owners alike, in terms of price and availability."
Investing heavily in print ads has obviously left opportunities in other mediums, with outdoor and TV holding relatively low shares of the retail market.
"You have to think that there are significant opportunities for some retailers to achieve significant standout by dominating spend in one of the other media channels. Clever use of either channel could lead to real benefits," says Mr Pierce.
Telecoms also saw major changes last year, with a definite shift to outdoor and digital advertising away from television -- something Mindshare expects to see more of as the major service providers fall into a price war while mobile services become more and more commoditised.
Despite a lack of official figures for digital ad spend, Mindshare reckons digital has about 12pc of market share, with scope for more growth.
"There are potentially serious opportunities for savvy advertisers there," concludes Mr Pierce.