Slowdown to hit non-TV segment hard

Non-TV advertising, particularly billboards and print media such as newspapers and magazines, will be severely affected by the economic slowdown this quarter, as clients are increasingly cautious and spending their ad budgets more selectively.

"We don't think non-TV advertising will perform well during the economic difficulties in the last quarter of the year. It is in the nature of advertisers to cut spending on non-TV ads during a downturn and focus on television, which they believe will contribute sales in return," Rathakorn Surbsuk, head of The Exchange, Mindshare's media-investment unit, said last week.

According to Nielsen Media Research, overall advertising expenditure in Thailand dropped significantly by 7.08 per cent year on year to Bt7.6 billion last month.

Ad expenditures also dropped slightly by 1.9 per cent to about Bt73.9 billion in the first 10 months of the year.

Cinema advertising reported the biggest year-on-year decline of 33.56 per cent to Bt299 million in October, followed by in-store ads, which dropped by 27.5 per cent to Bt42 million.

TV advertising expenditure fell 5.2 per cent to Bt4.4 billion, while ad expenditure in newspapers and magazines declined by 9.9 per cent and 12.1 per cent to Bt1.2 billion and Bt456 million respectively. Expenditure on outdoor advertising also dropped 6.6 per cent to Bt349 million in October.

Only ad expenditure on radio and the mass-transit system, largely the MRT and the Skytrain, posted year-on-year growth at 7.3 per cent and 18.9 per cent to Bt611 million and Bt113 million respectively last month.

Rathakorn said that during the current economic and political instability, and with the unrest in Bangkok, consumers preferred to stay at home and reduce the number of activities such as dining out and going to the cinema.

"The number of blockbusters screening at local cinemas has not been huge over the past couple of months, and many advertisers have changed their ad spending on cinemas from monthly or yearly packages to be more à la carte and to focus on money-making blockbusters," he said.

Rathakorn said those advertisers had also decided to cut their ad spending on in-store media and convert the money into pricing campaigns in order to return immediate benefits to consumers.

"I believe billboards and print media such as newspapers and magazines will be severely impacted by the economic downturn both in the last quarter of this year and next year," said Rathakorn.

He added that the billboard segment would suffer due to a decline in property projects, which were its biggest ad spenders, as they had also been affected by less investment capital and lower consumer spending power. Many print media will at the same time be hurt by lower sales and rising newsprint costs, he said.

Kitti Chambundabongse, chairman of Spa Advertising, said the indicators for the media industry had not been too healthy over the past couple of years.

"Advertising spending has achieved annual growth of only 1-2 per cent in the past two years. This is not 'real growth', as the numbers already include media inflation. This means that real growth would be minus or flat," said Kitti.

He said overall advertising spending had witnessed a drop of between 1 per cent and 2 per cent year on year over the first 10 months of this year. This means that the real performance will be even worse.

"I'm not surprised at the situation, following the global economic difficulties and the many lay-offs that have been made by many large companies all over the world. This has an emotional impact on the level of confidence of local investors and consumers, who cut their investment and spending at first sight," said Kitti.