Ad spending recovers after very poor year

By Karyn Scherer

Advertisers are finally starting to spend again after cutting back their budgets last year, according to advertising agencies and media outlets.

Their optimism follows the release yesterday of official figures which show the advertising industry had its worst year in nearly a decade last year.

The figures, published by the Advertising Agencies Association, show a big drop in newspaper advertising was largely to blame for the first fall in spending on traditional media outlets since 1991.

The fall follows two years of mediocre increases, but most outlets insisted yesterday that the situation had since improved. Newspapers appear to have suffered most from the recession which walloped the economy in the middle of the year.

Total spending on newspapers, including community newspapers, fell nearly 5 per cent in the 12 months ending December, to $543 million.

Television, cinema, and outdoor advertising companies appear to have benefited most from the cut-back. Radio held its share of the market, while magazines dropped slightly.

The executive director of the Newspaper Publishers Association, Phil O'Reilly, said 1999 was proving to be a better year for the industry.

Newspapers had been hit particularly hard towards the end of last year, as communities reacted to the tough economic conditions. However, advertisers were slowly returning to the medium.

The television industry also claimed yesterday that it was having an even better year this year, after bouncing back last year from a difficult 1997.

Total spending on television increased by 2 per cent during the year to $473 million - a total that is still below its record levels in 1995 and 1996.

The increase came largely from Sky TV, and the inclusion of a full year of revenue from Prime TV and TV4. TVNZ has already announced advertising revenue was flat during the year.

The executive director of the Television Broadcasters Council, Bruce Wallace, said free-to-air broadcasters were feeling much more buoyant about 1999.

"The first three months of 1998 weren't great for television and that was reflected in the total figure, when newspapers did skid over the top of us. There's been a lot of work done since then, and that's reflected in the fact that more people watched television over summer than for many years."

Peter Myles, media director for Auckland advertising agency Colenso, said he believed the industry was finally benefiting from improved consumer and business confidence.