Inquest into UK Ad Downturn Exonerates US Multinationals

17 August 2001

A new study from WPP-owned media buying unit MindShare belies the widely held assumption that the downturn in Britain’s ad industry was triggered by falling adspend from US multinationals.

Using data from ACNielsen, MindShare studied the top hundred advertisers in the UK, accounting for over half the total adspend. In the first six months of 2000, American firms actually increased their spend by 3% across all media and 4% on television compared with the first half of 2000.

Conversely, in the same period marketing expenditure by British companies fell 9% (4% for TV), while advertisers from mainland Europe reduced spend by 5% (7% for TV).

“The hypothesis for much of the year has been that the UK market is down because the US economy was forcing US firms to spend less,” commented Simeon Duckworth, managing partner and chief economist at MindShare. “But most of the cutting in the UK has been coming from UK and mainland European advertisers.”

Some American advertisers have reduced UK spend over the first half of 2001, including McDonald’s (down 20% to £18.8 million), Coca-Cola (down 17% to £16.7m) and Mars (down 7% to £23.5m).

However, others increased marketing expenditure – AOL Time Warner raised spend 83% to £18.5m, Mars-owned petfood company Pedigree Masterfoods upped its budget 5% to $19.2m, and Procter & Gamble increased 5% to £52.6m.

American companies make up 29 of the top 100 advertisers (compared with 69 from Britain and mainland Europe) and account for over one-third of the top ten’s adspend. The two biggest advertisers in the UK are both US multinationals – P&G and Ford Motor Company.

MindShare also found the fall in spend more dramatic outside the top hundred where expenditure on TV advertising dipped 2%; across all companies, however, it slumped 9%. Observed Duckworth: “When the market contracts, it’s not the big companies that cut. It’s the smaller ones.”

News source: Wall Street Journal