Advertisers continue to cut back in the UK

24 March 2010

LONDON: Many of the biggest advertisers in the UK reduced their media budgets last year, figures from The Nielsen Company, the research firm, have shown.

The Central Office of Information, the government's communications arm, boasted the largest outlay for a single organisation in 2009, up by 13.2% on an annual basis to £207.9 million ($313m; €231.4m).

It leapfrogged Procter & Gamble, the FMCG giant, which reduced its expenditure by 13.4% to £155m in the same period, falling to second in Nielsen's rankings as a result.

Unilever, in third, posted a similar drop in its media activity to its major rival, meaning its budget came in at £129.1m over the 12 months as a whole.

BSkyB, in fourth, recorded an uptick of 19.4% to £108.8m, with fifth-placed Tesco also increasing its investment in communications by 17% to $104.6m.

"More people are spending more time at home and our product is an audiovisual one, so we need to invest in it," Lucian Smithers, BSkyB's director of brand strategy and communications, said.

Asda, DFS and Kellogg were the other members of the top ten advertisers which committed greater funding to this area, but Reckitt Benckiser and L'Oreal both cut back.

Elsewhere, Wickes, the DIY chain, more than doubled its adspend to £19.6m, with Aviva, the insurance specialist, and Lidl, the discounter, both up by 87% to £48.6m and £22.5m respectively.

"We spent less on advertising than we'd expected," Sally Shire, Aviva's group brand development director, said.

"Media was much cheaper, we got cut-through faster and, in terms of outdoor, our posters often stayed up for much longer than the period we'd paid for."

Overall, the advertising revenues attributable to the top 100 advertisers in the country fell by 9.7% to £7.8bn when measured against the previous year.

Companies in the financial services sector registered some of the largest declines, with Barclays off by 35%, to just over £16m, and Santander falling 45% to £15.7m.

By medium, television ad sales tumbled by 11.5% to £3.4bn when compared with 2008, with press experiencing a decrease of 9.6% to £3.0bn.

Outdoor was also down by 14.0% to £664.4m, while radio was largely flat on £573.7m.

However, cinema enjoyed growth of 4.8% to £179.4m.

"Price deflation has created an opportunity for brands. The cost of entry for TV and outdoor has fallen dramatically," said Neil Johnston, head of buying at OMD UK, the media network.

"Demand is rising and the cost of outdoor advertising is rising, but no one thinks that the recession is over and done with," he added.

A separate report by Bank of America Merrill Lynch predicted that the European advertising market will generate upticks of 3.8% in 2010, 6.8% in 2011, and 6.3% in 2012.

However, the pace of expansion us expected to be slightly slower in the UK, standing at 3.1% this year and 5.5% in 2011.

Data sourced from The Nielsen Company/Brand Republic; additional content by Warc staff