Business 2000: Cork-popping year that lost fizz for the advertising industry

By DITA DE BONI

If 1999 was a cloud with a Christmas-tinted silver lining, 2000 was an ongoing drizzle for the local advertising and marketing industry.

But this year, warm springtime sun is forecast. And after last year's trials and tribulations, industry figures are more than ready to fold their raincoats away.

But first, the bad news. Although the final figures for last year's "adspend"- the amount spent on advertising - will not be released until April, they are expected to be a "bit of a fizzer" compared with 1999's relatively healthy 6.2 per cent rise, says one industry source.

The Association of New Zealand Advertisers estimates that last year, advertisers would have spent $1.5 billion in main media advertising, just "slightly ahead of 1999."

By comparison, global adspend growth last year was around 5 per cent, with US growth expected to be up 9.4 per cent at $US235.6 billion ($528 billion), says New York-based Universal McCann.

Airlines, pharmaceutical and insurance companies were the biggest spenders in response to stronger-than-expected economic conditions there, the agency says.

In the US in particular, one area is especially responsible for a growth in adspend: the online medium. But it didn't look good a few months into last year. The advertising budgets of dot.coms disappeared into the ether like so many of the companies themselves after the tech stock bubble burst in April.

And fears that the advertising revenue of large internet companies would drop because of slowing growth in internet adspend by small e-companies sent the shareprices of internet giants such as Yahoo!, RealNetworks and DoubleClick tumbling in the US in July.

But the advertising spend of dot.coms is different to spending by companies on internet advertising.

Growth is escalating in this area. Spending on advertising in cyberspace grew 97 per cent last year to an estimated $US7 billion. That growth is predicted to slow to 23 per cent by 2005, but is, by then, expected to account for 10 per cent of all adspend as opposed to around 2 per cent now.

In New Zealand last year, there was a proliferation of speciality online advertising and marketing boutiques. Brave New World, Bluechilli, Engage Media and Message Media were just a few of the market entrants. Specialist e-measurement services from companies such as Hitwise and Red Sheriff also contested the market of stalwarts such as ACNielsen.

But growth of online advertising is fairly minimal in this country.

About $70 million was spent on e-advertising last year. Exact figures are hard to get because the market is very fragmented, while "horse trading" or "barter" between companies may add to revenue. Either way, the figure is only slightly up on 1999 and still constitutes only about 0.5 per cent of the country's total adspend.

"We are still probably a year behind the US," says Brian Milnes, managing director of Nielsen//NetRatings. "We're getting there, but we're not there quite yet."

While online advertising is one development the industry is gearing up to understand better, another that has required some adjustment is the change of Government. Last year, the Coalition cocked its barrels at the self-regulatory environment advertisers have come to cherish, and set about reviewing and even debating the need for advertising to children, advertising of pharmaceuticals and therapeutics, and liquor and tobacco labelling.

Add to that a winter of discontent in business - which led to corporates tightening advertising and marketing budgets - and a threatened tax on advertising and it is easy to see why many industry noses were out of joint come year's end.

Advertising bodies have lobbied hard for the Government to leave self-regulation alone. In March, the Advertising Agencies Association (AAA) became the Communications Agencies Association (CAANZ) and, under new chief executive Lynne Clifton, admitted direct marketers, media buyers and interactive ad/marketers into its organisation for the first time.

After pursuing their cause, the CAANZ and the Association of NZ Advertisers, among others, say the "threat" to self-regulation from the Government is over, for now.

Ms Clifton, in turn, sees the continuing loss of talent overseas as the greatest problem ahead.

"We are going to be feeling the effects of these losses for years to come unless we provide the opportunity, stimulation, challenge and the environment to keep good people as well as attracting new talent and ex-pats back."

That view is echoed by Martin O'Halloran, managing director of DDB and the president of CAANZ.

"The biggest concern in the industry in the past year has been the effect of globalisation on the New Zealand market. Much of the control and many marketing departments have moved to Australia and Asia. Media spend has moved from New Zealand to these other markets and creative has been generated offshore.

"Good people have also left for overseas and I strongly believe that [we] have an obligation to invest in training advertising newcomers.

Mr O'Halloran says 2000's depressed economy should pick up in the coming year.

"In 2000, many companies lost confidence to advertise and held back from marketing. We are much more optimistic about this year. There is a more buoyant feeling in the market and we expect 2001 will be a good year for New Zealand advertising."

To combat the down times, as well as the exodus, agencies continued to move into "value-added services." These were generally consumer marketing research packages, such as Foote Cone & Belding's "mind and mood" studies or McCann Erickson's Pulse.

But for all the economic gloom and belt-tightening, there were a swag of award ceremonies and the sector, despite its fiscal funk, proved it could still turn on a good party. Michael Hurst in a genie suit and plenty of gold glitter ensured a magical night at the Axis awards, which celebrate the best of creative. The top prize was no surprise - Saatchi & Saatchi's "Bugger." Meares Taine took the top gong at both the Advertising Effectiveness Awards (for the Matrix-like Export Gold ad for DB) as well as the TVNZ/Marketing Magazine Awards (for its arthouse obesity opus for Xenical). The Direct Marketing Association's RSVP Award for the most creative direct marketing campaign went to TVNZ's America's Cup trade launch mail-out - "150 years of dirty tricks" - devised by Rainger Direct.

And a couple of mini-gongs of our own for two pivotal players in 2000. Andrew Stone, former head of Parnell-based Generator, received an unspecified but presumably healthy sum to back his agency into The Bates Palace. He is now the chief executive of Generator Bates, one of New Zealand's largest agencies with billings said to be over $70 million.

And for the same thing, only bigger: Kevin Roberts, who sold the Saatchi & Saatchi worldwide network to French firm Publicis for $4 billion in June, securing for himself a five year contract and a $4.26 million bonus cherry on top.

That's a bit of peak performance, n'est-ce pas Kevin?

Herald Online features:

2000 - Year in review

2000 - Month by month

2000 - The obituaries