Ad slump a recessionary blip

While the print media appears to be losing out to TV and the likes of outdoor billboards for the ad dollar, newspapers are far from down and out. KARYN SCHERER reports.

For those who earn their crust from advertising, confirmation this week that the market shrunk last year for the first time since 1990 was probably old news.

Advertising revenue figures, collated by the Advertising Agencies Association, told many people what they already knew - that there were fewer dollars to go around last year.

But the figures were particularly alarming for the newspaper industry. While companies and individuals spent more than $1.3 billion last year trying to attract consumers' attention, they spent more of it with television and less with newspapers - reversing the trend of previous years.

According to the figures, community newspapers held their own in a tough market. However, spending on daily and Sunday newspapers dropped by $27 million. Magazine spending dropped by $8 million, while spending on radio dropped by $2 million.

The winners were outdoor and cinema advertising (up $7 million), and television (up $8 million).

The past three years have not been memorable ones for the advertising industry. Last year's dismal performance follows two flat years, when spending increased by less than 2 per cent.

For some media watchers, the figures are confirmation that the mass media is losing its grip on advertising dollars as a new generation of smart young marketers embraces new technological developments and new ways of reaching out to consumers.

While some media organisations have happily jumped on the "new" media bandwagon, others remain confident, however, that the impending death of the "old" media has been greatly exaggerated.

Over at TVNZ, staff are jubilant at last year's performance. "TV One and TV2 got reasonable growth last year, but growth this year is even higher again, says Jeff Latch, general manager of sales. "If we end up having as good a second half as the first half has been, we'll be delighted."

It has to be said the improvement at TVNZ follows many years of decline for the television industry. The explosion in the number of free-to-air and pay TV channels over the past few years, and declining viewer numbers, appear to have confused advertisers, who have found other places to spend their money. Even with last year's boost, spending on all forms of television, including Sky TV and Prime, is not yet back up to the levels it reached in 1995 and 1996.

Nevertheless, the newspaper industry is not underestimating its traditional rival. The dramatic falls in revenue among dailies and weeklies last year frightened many newspaper executives. Many embarked on severe cost-cutting, but some, like the New Zealand Herald, have also poured significant resources into smartening up both their product and their advertising departments.

The executive director of the Newspaper Publishers Association, Phil O'Reilly, prefers to see 1998 as a blip caused by a recessionary economy. The industry has done much to woo back advertisers, he says.

"I don't think we're flabby, backward-looking, out-of-the-touch-with-the-market guys, he laughs. "If you'd said that about us 15 years ago you might have had a point, but these days we're pretty market-focused, pretty keen, and pretty lean. We're going to bounce back, I'm very confident of that."

The executive director of the Association of New Zealand Advertisers, Jeremy Irwin, agrees that many companies seem to be much more confident about spending money this year than they were last year. Nevertheless, it goes without saying that everyone remains committed to wringing the most out of their advertising budgets.

"Any good product manager or marketing manager would like to try something new, something different and something a bit more exciting," he says.

"If they can make it work for them that's tremendous, but then they have to look at the funds available and decide whether they are prepared to take a risk."

Mr Irwin, who represents many of New Zealand's biggest advertisers, cites the outdoor market and the Internet as two areas where interest is growing. In Australia, there is a big interest in alternative media, he says.

However, it is also hard to ignore the results of a survey carried out by the association at the end of last year, he says. The survey showed almost all members intended to continue with traditional forms of advertising.

"The results, to a certain extent, were surprising, but thinking carefully about it, the main media is where the most effective return comes from the advertising dollar."

The head of one media buying agency, M For Media's Kevin Blight, agrees. Many marketers and media buyers are desperate to find innovative ways of communicating with consumers, he says. He believes the move is part of a push for more accountability from the profession. However, he is concerned some people are losing sight of the obvious.

"In a sense, people are forgetting about the mainstream. For the business to keep growing, it needs to convince people again of the value of just placing ads. If people can understand the value of placing ads in terms of how it affects the sales and profitability of their businesses, then they will put more money into it."

Of course, media buyers have a vested interest in maintaining what is commonly known as above-the-line advertising. It is how they earn their money.

But at least one major advertiser is happy to testify about the power of traditional forms of advertising. Car-maker Nissan conducted a major review of its advertising strategy last year, and decided to concentrate almost entirely on press and television advertising. It now uses television for its marque and product advertising, and newspapers for retail punch.

Nissan's director of sales and marketing, John Manly, says the only thing the company is interested in was how many vehicles it can sell: "That's all we're aiming at - results."

While it would be naive to think other factors have not influenced customers' behaviour, he is convinced its new strategy is paying off. Its research shows awareness of the Nissan brand has increased by 50 per cent over the past 18 months.

"It's fabulous. Our market share is up, our product is performing well in all segments and we're very happy with our results."

* Karyn Scherer can be contacted at Karyn_Scherer@herald.co.nz or on (09) 373-6400 ext 8240.