Stagnant ad market set to dip even further
Amid a general slowdown in the advertising industry, breweries and mobile phone operators continue to provide ad companies with the necessary cash to stay in the black. But as revenue from these two sources tapers off soon, the sector could sink further, according to a report just published.
Expert Monitor (http://www.expert.wroc.pl)'s May report said spending among Polish advertisers has risen by 33.8% year on year against the first five months of 2000, but analysts and the media research company's chief, Konrad Pudlo, agree that the growth is largely illusory.
While the study calculates total spending on the basis of officially announced price lists, the reality is that media have been awarding increasingly heftier discounts to advertisers during the past few months, which has dragged down their advertising revenues, Pudlo said. Ad spending by Polish firms has fallen by 10-15% in the first five months of 2001 compared to January-May 2000, he added. Jakub Benke, general director of Starcom media house, estimated the drop at 5%. "The demand for advertising has declined, but the media have not lowered their (official) price lists," he said. "Instead, they are now giving deeper discounts."
Industry sources credit mobile operators and breweries with saving the ad market from suffering more than it already has. "PTK Centertel nearly doubled its advertising budget in the surveyed period," Pudlo said, adding that mobile phone operators burn through a slew of cash on advertising because the wireless market is still far from saturated. Despite holding 9.68% of the media ad market last year, telecoms spent even more during the first five months of 2001, garnering 10.17% of total ad spending and elevating the industry to the most advertised sector in Poland.
The near ban on alcohol-related advertising, which is scheduled to take effect this fall, has prompted breweries to intensify their campaigns before the taps are turned off. As a result, brewers pushed the "beverages" category up to the second position in Expert Monitor's ranking, while the category's share of total advertising spending rose year on year to 8.55% in January-May 2001 from just 5.93% in 2000.
However, breweries' cash will stop flowing once the ban begins, promising a nearly 10% loss in revenue for many advertising firms. Also, mobile phone operators are not likely to continue expanding their advertising budgets indefinitely. "Era GSM is now very careful about how it's spending its advertising funds," said Neil Selby, general manager of D'Arcy Masius Benton & Bowles, an ad agency that lists Era GSM among its clients. "The telecoms cannot drive up the advertising market alone," Selby said. "Even though their spending is still increasing, they're getting close to the point where spending more on one brand doesn't make sense anymore. Especially because they're now trying to attract fewer and fewer affluent customers."
Pudlo has faith that the banking sector may kick-start ad sales. "The interest (among banks) is increasing," he said. "Banks are introducing new products, especially those using new technologies such as the Internet and mobile data transmission."
