Companies to cut advertising budgets for remainder of the year
Advertising to decrease especially in newspapers, although advertising budgets still above those during 2008-2009 recession
A sure sign of an oncoming depression is when companies start to reduce their advertising budgets. In Finland, media advertising has gone down clearly in recent months. In the second quarter of this year, the year-on-year reduction was in the region of seven per cent, TNS Gallup reports.
Based on the recently published "advertising barometer" by the Association of Finnish Advertisers, this development is set to continue in the latter part of the year. Some 33 per cent of the companies that took part in the survey say they will introduce reductions to their originally planned advertising budgets for the remained the year.
Only 13 per cent of the firms plan to increase their advertising.
"Companies are now clearly being cautious", says Ritva Hanski-Pitkäkoski, managing director of the Association of Finnish Advertisers.
According to Hanski-Pitkäkoski, the situation still looks more stable than it was during the 2008-2009 downturn, and already next year the interviewed companies plan to increase their advertising campaigns.
In 2009, media advertising decreased in Finland by nearly 16 per cent. This year, by the end of July, it had declined comparatively year-on-year by about four per cent.
The printed media, in particular, has seen its advertising income decrease. Advertising in the newspapers went down by 12.5 per cent in April-June, and the trend continued in July.
Job and tourism advertising, in particular, have diminished.
The outlook for the remainder of the year is also bleak. More than half of the interviewed companies plan further cutbacks in their newspaper advertising. Only a couple of per cent of the firms plan to increase their advertising.
On the magazine side, the advertising decreased by about six per cent in the second quarter.
In recent years, electronic advertising and television have increased their share of the Finnish companies’ roughly EUR 1.4 billion total advertising budget.
Still, in the very recent months, even television advertising has fallen away to some extent. In Q2/2012 this negative development was in the region of three per cent.
For the rest of the year, the advertisers plan to keep their television advertising budgets more or less unchanged.
Hanski-Pitkäkoski points out that apart from the favourable long-term trend, the increased supply in the form of added number of television channels has also had a positive effect on television advertising.
Despite the negative development elsewhere, advertising continues to grow on the Internet, mainly thanks to the large-scale structural change that is taking place in the media field. In Q2/2012 Finnish companies increased their online advertising by about six per cent. Approximately 70 per cent of them plan further increases for the rest of the year.
A total of 90 firms took part in the Association of Finnish Advertisers survey in August.