Just A Reminder: Your Advertising Model Is Dying

As if you were under any illusions otherwise, the advertising and therefore media industry is getting very hurt by the recession, and now there’s some nice hard stats to back up that feeling of malaise and foreboding. According to the Institute of Practitioners in Advertising’s Bellwether Report (catchy), only 7% of 300 British marketers at UK and multinational companies increased their marketing spend in the last quarter of 2008. Presumably they were McDonald’s, and banks like Citigroup desperately trying to convince everyone that they weren’t absolute buffoons via full page ads in newspapers.

Moray MacLennan, CEO of M&C Saatchi and president of the Institute that made the report, said “the best we could hope for is that the decline will bottom out in the autumn”. I’m not sure the New York Times can wait that long, Mor!

Some numbers: it’s the fifth quarter of decline in ad spending, and there is a “sharp acceleration in the overall rate of decline”; 45% of respondents are setting 2009 budgets below those for 2008; television and print advertising fell by a third (a third!); spending on PR, event sponsorship and market research down by nearly a third; just 4% of companies saw an improvement in their financial prospects; even internet ad spending fell drastically; and GDP decline is “gathering pace”. “Pessimists exceeded optimists to the greatest extent in the survey’s history by a wide margin”, spake the report. 

Playing these trends out in real time is Mecom, the UK-based European newspaper group, who announced yesterday that they’re selling off their German titles. The company, whose shares fell 94% in the last year, has a net debt of €650m, and needs the cash from the sale to fend off a breach in banking covenants. Analysts suggest that they got a good deal, but when you’re a media organisation living hand-to-mouth by selling off your assets, you know you’re still a bit shafted. It’s looking like the media landscape is going to be unrecognisable in just a few months. Take it away, Nelson:

Posted by Ben Beaumont-Thomas in Creative Economy | January 13, 2009 10:39AM |