UK Brands Ignore AdSpend Plea as Economic Squeeze Bites

03 April 2008

LONDON: UK brands are reportedly tightening their advertising belts as budgets are diverted to meet rising raw materials costs.

Firms such as Premier Foods, which owns bread brand Hovis, have said they squeezing promotional activity as they face higher grain prices – the result of poor harvests, high demand in the Asia and the demands of biofuel producers.

Many manufacturers are facing pressure from retailers who themselves are reluctant to pass on higher prices to consumers.

The net result is that TV broadcasters are said to be facing the possible disappearance of around £100 million ($198m; £126.7m) in ad revenues this year. There is already a £30m estimated shortfall for May.

Some media buyers believe the key autumn period will see a decline of between 7% and 9%, in contrast with the Advertising Association's forecast that the TV industry will see a 0.8% increase over 2007. 

They also suggest that brands are ignoring industry body, the Institute of Practitioners in Advertising, which has urged them to maintain their spend during the economic downturn.

Predicts one gloomy (but unnamed) TV buyer: "The feeling is that, the way things are going, TV ad revenues could end up down as much as 3% on 2007."

Data sourced from Brand Republic (UK); additional content by WARC staff