NZ up with best in ad recovery

By IRENE CHAPPLE

Free spending in the Asia Pacific region is buoying a sluggish recovery in global advertising.

Asia Pacific, including New Zealand, can expect spending figures well above global averages, say forecasts.

In New Zealand, the latest figures for spending from January to May show an average 8 per cent growth rate, supporting the upbeat forecasts.

The recovery is being led by television, thanks largely to rugby and soccer. Television has trumped radio and print's surge of popularity.

Advertising in the Asia Pacific region, excluding a depressed Japan, is expected to grow by more than 7 per cent this year, say the forecasts from global advertising giant ZenithOptimedia.

But a worldwide bounceback is now seen as distant; figures for last year confirm a global shrink of 6.4 per cent.

That drop is twice as deep and occurred at double the speed of the advertising recession 10 years ago, says ZenithOptimedia.

The contraction has taken US$23 billion ($47 billion) from the advertising industry since 2000. Just US$3 billion is expected back next year and a further US$7 billion in 2004.

By the end of this year, the five big European economies will have shed 8 per cent of their 2000 advertising volume in real terms, says ZenithOptimedia.

Its report says those economies would have done well to replace 5 percentage points of this by 2004.

The United States economy has improved, and ZenithOptimedia expects a 1.2 per cent decline in major advertising spending this year.

That compares with a decline of 6.1 per cent last year, although ZenithOptimedia pointed out that the better figure was due to money held back last year being spent this year, rather than "organic" growth of the industry.

Asia Pacific's initial burst of spending is forecast to settle at 6 per cent growth through next year and 2004.

News has been consistently good for New Zealand, which appears to have weathered the global downturn better than most.

Last year, advertising spending, as collated by the Advertising Standards Authority, reached $1.6 billion.

Latest figures from ACNielsen are available only to May this year, but they show total spending of almost $730 million, up 8.08 per cent on the same time last year.

Television has taken a huge lead. ACNielsen says its spending of $492 million was 13.6 per cent up on the same time last year.

ACNielsen's figures are ratecard costs, which out-brag even the in-house statistics. The New Zealand Broadcasters Council, taking account of discounts on ratecard, shows a more subdued picture. It reports a half year (to June) increase of 5.4 per cent.

Whichever figure is taken, television has been recognised as a serious force so far this year.

The executive director of the Television Broadcasters Council, Bruce Wallace, said consumer and business confidence was "running hot".

"World Cup soccer and the onset of All Black rugby assisted the revenue increase," he said. "However, spending across virtually all categories rose."

Newspaper spending remained steady after a rise in popularity last year. Radio registered a comparative 5 per cent drop in spending.

Magazines fared slightly better with a 2.6 per cent drop. Cinema recorded a drop of 17 per cent to $2.9 million, and Val Morgan general manager Simon Gooding said the first half had undoubtedly been difficult. .

But he was optimistic about the rest of the year, saying viewer numbers were the highest for a decade. Such information took time to get to advertisers, but he believed cinema spending would improve through the year.

The ZenithOptimedia report said New Zealand's television industry might face problems as more marketing budgets were decided overseas in large multinational food companies.

Magazines were criticised for being in "disarray", because of long lead times and an unwillingness to give discounts.

The report also doubted much-touted growth in outdoor advertising, saying the medium rarely sold out. It estimated the growth at around 3 per cent.

DDB media director and Communication Agencies Association of New Zealand media committee member Kath Watson was cautious about the industry figures. She said an overall growth rate of 3 to 5 per cent was more likely.

The increase in television spending could be a reflection of a rates rise, but might also show a general shift back to television advertising, she said.

Media buyers had noticed an increase in spending from companies dealing in fast-moving consumer goods such as food and beverages, which were usually advertised on television due to the mass market reach.

Such companies accounted for around 13 per cent of the market, and Watson estimated an increase of between 10 and 15 per cent of spending based largely on new products.