Nielsen: Growth in Global Advertising Expenditure Slows in Q2

It is the first significant decline since the Nielsen Global Ad View Pulse Q3 2009, when ad spend fell in more than half of the markets tracked due to the global recession. While quarterly spending increased 5.7 percent year-over-year to a total of $127 billion - based primarily on published ad rates and four major media groups - there was definitely a slowdown compared to the 8.9 percent growth rate in the first quarter of the year, according to Randall Beard, Global Head of Advertiser Solutions Nielsen. Overall, the global advertising market closed the first half of 2011 up 7.2 percent year-on-year.

Advertising investment in Fast Moving Consumer Goods FMCG has declined in Europe and North America and, together with the continued loss of newspaper advertising in these regions, this has led to slower growth. FMCG advertising investment recorded its slowest quarterly growth since the Global Ad View Pulse Q1 2009: down 4.0 percent globally with sharp declines of minus 3.6 percent in Europe and minus 3.0 percent in North America. The advertising reductions in the FMCG sector came as a surprise, particularly at Easter time - traditionally an important occasion for advertising placements in the FMCG sector and confectionery industry in Europe and North America. For the late Easter at the end of April this year, higher advertising sales would have been expected at the beginning of the second quarter, notes Beard. Within the FMCG industry, the cosmetics and personal care sectors recorded the most stable growth with an increase of 6.9 percent, accounting for almost one in ten dollars invested worldwide. The FMCG industry has proven to be one of the most resilient and recession-tested advertising sectors in recent years, but renewed concerns about another global recession and expected consumer retrenchment have prompted advertisers to pull back from the most crowded regions in Western Europe and North America, Beard added.

Interestingly, apparel and accessories, the areas hardest hit by the recession in 2009, posted the highest quarterly results year-on-year, with a global increase of 17.9%. This increase was driven by a strong rise of 27.9 percent in Asia-Pacific and a 39.8 percent increase in China.

In Western Europe, quarterly advertising expenditure remained almost identical to the previous year with a minimal decrease of 0.3%, although seven of the twelve European markets surveyed recorded declines. Advertising expenditure in the USA, the world's largest advertising market, and in Germany, Europe's largest economy, both saw an increase of 3.1% in the second quarter of 2011.

Asia-Pacific recorded the strongest regional growth in the second quarter of 2011 with an increase of 9.3 percent, with double-digit percentage growth rates from Indonesia (18.9 percent), China (14.8 percent), Hong Kong (13.4 percent) and the Philippines (12.6 percent). Of the 36 global markets covered in the Nielsen Global Ad View Pulse report, Argentina recorded the highest quarterly year-on-year growth at 28.5%.

Worldwide, the worst affected market in the second quarter of 2011 compared to the previous year was Egypt (-51.7%), where advertisers were cautious due to the uncertain political and economic climate in the wake of the Arab Spring. Further double-digit percentage reductions were recorded in Turkey (-12.9%), Taiwan (-11.0%) and southern European markets such as Spain (-12.6%) and Greece (-13.7%).

While radio recorded the most stable percentage growth across all traditional media in the second quarter of 2011 with an increase of 8.2%, television continued to dominate global advertising overall and increased its market share and advertising expenditure. In the first half of 2011, television advertising accounted for 65 dollars of every 100 dollars invested in advertising worldwide, compared to 63.70 dollars the year before. According to Nielsen, the overall TV audience continues to grow, Beard continued. In the USA, television usage has increased by 22 minutes per month and per person compared to last year. This means that this medium remains the dominant source of video content across all demographics.