John McGee: Media industry struggling to make up the numbers
Although the economy is performing well and consumer sentiment is riding high, advertising spend still trails the good old days
Back in 2007, around €1.2bn was invested in advertising by a wide range of Irish and international brands. Those were the days of property supplements the size of door-steps, semi-state broadcasters being paid a king's ransom and, overall, advertising was thick on the ground and brands had plenty of cash to throw at marketing.
How times have changed.
Depending on who you talk to advertisers and their brands are forecast to spend anything up to €912m this year. That's the figure Core Media's trading director, Eddie O'Mahony, feels will the likely outcome for the year. And yes, it's a little less than €300m shy of the 2007 spend.
While this is still up by around 3.3pc on the estimated €883m that advertisers splashed out during 2016 O'Mahony urges some degree of caution.
"They are just forecasts and all forecasts are subject to change. Because of some of the short-termism and uncertainty in the marketplace at the moment, some of which has to do with Brexit, we will be keeping a very close eye on the figures and revising them on a quarterly basis," he says. "Already 2017 has got off to a very sluggish start, particularly when compared to the first few months of 2016 when there was plenty of activity across the board. But it will pick up," he adds.
As forecasts go, they don't make for pleasant reading. They may even send shivers down the spines of some media organisations, particularly at a time when the wider economy and consumer confidence are at post-recession highs. If anything, the rising economic tide that might be visible is not lifting all boats. If Core Media's forecasts are right, the 3.3pc increase in the overall market, masks some interesting, but also worrying trends.
Starting with TV, O'Mahony is forecasting a modest increase of around 2.5pc for the year with the market likely to end up around €243m by the end of the year. While Brexit will continue to weigh on both sentiment and confidence - given that around 25pc of TV advertising spend comes from the UK - the market will see a healthy level of activity between the incumbents as TV3 Group ups the ante with its new 3 station while other players like Eir Sport throw down the gauntlet to rivals like Sky Sports.
The radio sector, meanwhile, could see a decline of around 3.5pc according to O'Mahony. This would leave it at around €122m by the end of 2016. Again, this is subject to change he says but not materially.
While radio did indeed have a tricky 2016 - it was down by around 6pc - steps are well under way to create a more unified voice for the commercial radio sector and the opportunities it offers advertisers. This will be similar to other media organisations like News Brands Ireland and the Internet Advertising Bureau (IAB). If the industry gets it right, it could go some way in moving the dial for radio later in the year.
Elsewhere, however, print looks like it will be the biggest casualty, according to Core Media with a forecast decline of around 9.5pc to somewhere around €138m for the year. This compares €164m in 2014 and includes national and regional press as well as magazines, according to O'Mahony.
One of the stellar performers in recent years, out of home (OOH), looks set to grow again in 2017 - albeit by a more modest 5pc - to around €75m. OOH's recent success owes a lot to the incorporation of digital into its armoury with all the main players offering a range of digital solutions to advertisers.
In every conversation about media spends, all roads lead back to digital which, according to Eddie O'Mahony, is likely to see a 14pc increase in 2017. This would mean that digital, in all its various guises from display, search right through to social, could weigh in with an annual spend somewhere between €325m and €340m.
Digital, of course, has been the star performer in recent years, notching up substantial double-digit increases over the past four years. While this has gone some way in off-setting some of the declines in ad spend in more traditional categories like press and even radio, it's still not enough.
For example, figures published by IAB and PwC last year showed that as much as 74pc of digital ad spend goes mainly to just two companies - Google and Facebook. Should the indigenous media industry be worried? Absolutely.
Why are all these numbers important? In the context of any review of the media marketplace that may take place in the future, they provide both context and confirmation that the Irish media industry is facing some pretty stiff financial challenges over the next few years.
While much of the debate about media locally and internationally has rightly focused on issues like fake news, accountability and the future of news in the digital era, the bottom line is that it's still a numbers game.
As we have seen countless times over the past few years, if you don't have a business model where the numbers stack up, you don't have a business.
Contact John McGee at firstname.lastname@example.org
Sunday Indo Business