Ad agencies unfazed by worldwide sector gloom

By : Robert Wylot

   Advertising companies may be feeling the pinch as ad budgets are being trimmed worldwide, but the knock-on effects have yet to impact Poland, local agencies and market watchers said last week.

   “The roots of the falling advertising budgets in Poland are not due to the weak condition of the global economy,” said Jakub Bierzyński, CEO at OMD Poland media house. “It’s a result of reduced domestic demand.”

   Konrad Pudło, co-owner of the Wrocław-based Expert Monitor, an advertising market research firm, agreed: “The impact on Poland will be minuscule.” Pudło said that because Poland’s advertising market was already in a slump before Sept. 11, global political and economic uncertainty would not have much of a worsening effect. “While there may be a 2-3% drop in advertising worldwide, here in Poland we have seen a drop of 20% for several months.”

   TV ad spending in the Sept. 12-Oct. 11 period reached zł. 583 million ($139 million), up 49% compared to the 30-day period before the terrorist attacks in the United States.

   “The figures show that in the 30 days following Sept. 11, the attack on the World Trade Center had a practically imperceptible, if any, impact on the Polish TV-advertising market,” said Krzysztof Nożyński, special projects leader at AGB Polska, a TV monitoring company.

   The global economic turmoil comes at a time when firms are drawing up their advertising budgets for next year, but industry insiders remain optimistic about the sector’s outlook for 2002. “I think the 2002 budgets shouldn’t be lower than this year,” said Piotr Łukasiewicz, deputy managing director of ad agency McCann-Erickson Polska.

   Pudło said budgets for 2002 would not be smaller because of the current business uncertainty in the world. “The approach many companies are taking is to set aside reserve funds that they can use if and when they need to next year,” he said.

   Another reason industry players say Poland will be less affected by world events is that the hardest-hit industries, such as airlines and insurance companies, do not make up a large percentage of companies that advertise in Poland. “Travel operators, airlines and insurers are the three industries that have reduced their advertising expenditures worldwide,” Bierzyński said.

   McCann-Erickson’s Łukasiewicz went further, saying that while travel and airlines make up a marginal chunk of advertising in Poland, insurers are a relatively big group of advertisers, though only insurance against air transport-related risks will be affected. “Advertising spending on basic types of insurance shouldn’t drop,” he said.

   Nevertheless, while ad agencies may not be worried about how international events will play out in the local market, they are concerned about how the new government’s economic policies will affect Poles’ attitudes toward spending. “Amid the uncertainty surrounding the economy, consumers and companies are more inclined to save rather than spend,” Bierzyński said.