Advertisers: Are they dropping like flies?

Let’s set the scene, you can’t go a day at the moment without hearing or reading about companies going into administration or unemployment rates or whatever else the tabloids want to depress us all with. I spent 10 minutes on a social media site the other day, in that time I learnt that we are officially back in recession, inflation has risen 3.5% and average pay rises have fallen by 1.1%, needless to say I wasn’t left with a warm and fuzzy feeling!

Such stories lead to panic in all sorts of markets but I’m looking particularly at the advertising industry. It seems to be that if a company wants to save money, the first thing they do is cut or reduce their marketing budget. After all it’s the most painless way to save money.

The reduction in adverting budgets sends media companies into frenzy, in attempt to adapt to the changing market they drop their rates to remain competitive.

However, they probably shouldn’t panic so readily. Advertisers, despite appearances, aren’t dropping like flies and here’s what I mean.

There were 1146 local companies that advertised in June 2011 and 1619 that advertised in June 2007, so a loss of 473 advertisers. I suppose it sounds bad but I am looking at the whole of Wales, it’s possible that some of the 473 have gone into administration, some will simply not have advertised in that month but continued to advertise in other months and of course there are those that cut their marketing budgets.

The really interesting thing is that 889 local companies did advertise in June 2011 who didn’t advertise in June 2007.

So whilst the market didn’t grow in terms of the number of companies advertising, there was still a huge amount of new advertisers in that month. In fact almost double the number that didn’t advertise in that month.

In conclusion….. When one door closes another one opens! Consumers still want to buy your product and advertisers still need to talk to those consumers, you just need to identify who they are and where they’re hiding.

Source: Nielsen

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  1. Interesting article Jodi, as ever. I agree with you that in business as one door closes another opens.

    The worry for me from a customer relationship management point of view about the statistics you presented is that with existing customer numbers falling and lots of new customers, the advertisers seem to be struggling to hold on to existing clients.

    That’s not necessarily because advertising doesn’t work anymore.

    It could be that advertisers need to do more to keep their existing clients and offer more benefits. Maybe MACRO factors like the recession are wiping out old clients as you mention.

    Or maybe advertising is more relevant to newer businesses where raising awareness is a key objective, and less relevant to existing businesses that are well known.

    Now all you have to do is find the clients who don’t exist yet 😀

    • Hi Arek, thank you for making some fantastic points. Customer relationship management may play a part but I don’t think it’s the biggest contributing factor for the reduction in ‘existing’ advertisers. I think it’s more to do with the market itself, one of the first ways a company will save money is to reduce/cut their marketing budget. If advertisers are reducing their budgets and buying ‘cheaper’ campaigns, they simply won’t see the return that they are used too (subsequently put them off advertising in the future). I think there are endless reasons why the 473 advertisers chose not to advertise. Any idea where these clients are hiding? 

      • My suggestion? Get involved in giving/supporting new business start up initiatives, to build yourselves into the minds of new businesses, who are your potential advertisers 😉

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