SMI: Retail ads drop off as market declines 4.4%

SMI: Retail ads drop off as market declines 4.4%

A drop in retail advertising put agency ad spend back by 4.4% year-on-year in February according to the latest round of Standard Media Index (SMI) figures.

Retailers spent 8% less in February through their agencies, while FMCG is also weak with an 11% fall, as auto, up 5%, and finance, up 3%, remain the two major high spots.

According to MediaCom's chief investment officer Paul Brooks this trend could leave the market "struggling for growth" in 2013, expecting declines to continue until July.

He added: “I think the new financial year starting, and then hopefully renewed confidence coming from a more macro perspective around the global economy. It’s whether the latter six months of the year can grow enough to offset the decline we see in the first half.”

He added retail and FMCG account for around 30% of ad dollars spent, and “if they don’t turn around, we’ll be struggling for any sort of positive growth in 2013”.

However, some of the drop may be attributed to last year being a leap-year, adding an extra day to February, with Credit Suisse analyst Smanatha Carleton suggesting it actually equivocates to around a 1% decline with those factors.

Brooks' comments were echoed by Maxus CEO Jon Chadwick, who said the first quarter is always hard to predict the rest of the year from, as many advertisers were “slow starters”.

He said FMCG in particular was being squeezed by retailers which could have a knock-on effect for the rest of the year, but said it was “too early to call” what effect it would have.

TV advertising, which grew around 5% in January from a weak base of comparison, posted a 3.3% drop in the index, with the metro market back 4%, and the regional areas dropping 9%. Free-to-air again grew 10%, whilst overall free-to-air was down 3%.

Magazines and newspapers again continued to drop off at a large-rate, with papers dropping 21.^% after falling 11% last February, and mags down 27.9%.

Digital remained the one strong performer, with a 16% increase, although traditional display advertising is showing signs of slowing, with just 5% growth in February compared to 12% in January, and 22% the corresponding month last year.

Outdoor and radio remained stable, showing 1% and -0.1% respectively.

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