Biggest advertisers plan to slash spending
By Miriam Steffens | smh.com.au | 03 October
Nestle, the country's biggest advertiser of food products with an estimated marketing budget of $125 million, said it was looking to use more internet and direct marketing in preference to traditional media campaigns to reach customers next year.
"Given the economic downturn, [internet and database marketing] will probably play a more crucial role in our marketing mix for 2009 as marketing budgets generally tighten," said a spokeswoman, Fran Hernon.
The shift in spending could result in ads on television and in newspapers and magazines being cut, hitting media companies such as the Ten Network, Seven Network, Fairfax Media and ACP Magazines.
Myer, the nation's largest department store, has also stepped up efforts directly to approach its 2.5 million loyalty-card customers, which account for more than half its sales. But a spokesman said it was premature to talk about its advertising budget.
The comments come after Credit Suisse a fortnight ago forecast more pain for the advertising market, with spending tipped to fall 5.3 per cent in the year to June.
They underline a trend to new, more targeted advertising methods, which are gathering pace as budgets tighten, increasing the headaches for mainstream media companies.
Spending on direct email campaigns will more than double by 2012, according to the market researcher Frost & Sullivan.
Mr Harvey said this week that Harvey Norman, the country's second-biggest retail advertiser, with a budget of $125 million to $130 million, planned to cut spending on newspapers, radio, TV and catalogues.
"Now we're going to do what perhaps we should have done some months ago. But we thought we might be able to get through it and [the downturn] would be a mild phenomenon," he said. He plans to slash the budget by more than $32 million in Australia alone.
While the biggest advertiser, Coles Group, declined to talk about its plans, analysts viewed Mr Harvey's move as a bellwether for the wider market, given that during a slowdown he would usually outspend his rivals to win market share.
But not everyone is putting away the cheque book yet. Woolworths, the nation's third-largest retail advertiser, would continue to go "full steam ahead" as advertising was an integral part of its business, a spokeswoman said.
Telstra, which spent about $145 million on ads last year, also does not plan to cut back, having trimmed its marketing budget over several years.
First published by Smh.com.au on October 03 2008
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