Gov’t ad spending offsets drop from big-ticket products in 2006 (BusinessWorld)

Published in the May 09, 2007 of BusinessWorld

BY JENNEE GRACE U. RUBRICO, Sub-Editor

Reduced advertising spending from traditional big-ticket sources like personal care products and telecommunications weighed on this revenue stream last year, research firm Nielsen Media Research said. Nielsen data on regional spending in 12 Asia-Pacific markets showed overall ad spend in the Philippines — including radio, pay television, and cinema — hit $2.533 billion in 2006, up by only 4% from $2.441 billion in 2005.
Ad spend on television, newspapers, and magazines was almost flat at 1% at $1.948 billion from $1.924 billion, with magazines dragging down the segment on a 52% decrease in ad revenues to $29.042 million.
"Ad spend slowed down due to a decline in the spending of categories like telecommunications and personal care which used to be top spenders," Jay Bautista, Nielsen Media Research executive director, said in an e-mail correspondence.
Mr. Bautista noted that advertising heavyweight Procter and Gamble spent 15% less in 2006 versus 2005. He did not say how much the company spent for ads during the period.
Nielsen data showed shampoos, rinses and treatment products were still the top advertisers, but ad spend on these items were cut by 4% to $277.26 million from $290.207 million in 2005.
Telecommunications ad spending, meanwhile, totalled about $265.271 million, almost flat from 2005’s $265.941 million.
The proprietary drug segment, which spent $80.698 million, posted a 3% decrease in ad spend from $82.853 million.
The dismal performance of these categories, however, was offset by ad spending from government agencies and public utilities which jumped 56% to $91.934 million, and the powder milk category which spent $84.177 million, up 32% from $63.859 million ahead of an impending ban on advertising for infant formula.
Other big ad spenders included cough and cold remedies (up 27% to $80.287 million), food products other than biscuits and bakeshops (flat at $78.104 million), dentrifices, mouthwash and toothbrush (up 21% to $77.636 million), and entertainment (up 30% to $77.345 million).
Government-run Philippine Charity Sweepstakes Office, was the single biggest advertiser at $30.727 million in 2006; followed by Sunsilk Shampoo, $23.394 million; Nescafe Classic, $18.014 million; Hope, $15.735 million; and Tide, $13.896 million.
Palmolive Naturals spent around $13.282 million; Vaseline Healthy Glow shampoo, $12.407 million, San Miguel Beer $11.644 million; Globe Telecom cellular phone service, $11.518 million; while Creamsilk Straight and Relaxed conditioner spent about $11.213 million.
Free-to-air television maintained the lion’s share of advertising revenues at 71%, or $1.78 billion, but almost flat from 2005’s $1.712 billion.
"Free-to-air TV remained the main medium of choice," Nielsen said.
Meanwhile, print media saw a decrease in ad revenues, with newspapers raking in $136.228 million in 2006, down 10% from 152.117 million the previous year, while magazines earned $29.04 million in 2006, down 52% from the $60.566 in 2005.
This, Nielsen said, signalled "troubled times" for print media.
"Print advertising over the past years have been benefiting a lot from the telecommunications category and the ’ad wars’ between Globe, Smart and recently Sun. However, the past two years have seen a decline in the amount of money being spent by these companies on advertising, thus, affecting newspapers in general," Mr. Bautista said.
Radio showed a 9% increase in ad revenues to $426.288 million from $392.693 million, while pay TV posted the biggest growth rate at 28%, or $158.559 million from $123.838 million.
Mr. Bautista said cable TV subscriptions could become a growth area for advertising. "If cable TV subscriptions continue to increase, then there is potential for growth in ad spend. But, at the moment, only a few cable TV channels are benefiting from high ad spend due to their attractive viewership and ratings."
He said ad revenues may be bigger in 2007, it being an election year, but added that the increase would not be significant. "Historically, an election year only contributes an additional 3% to 5% in ad spend, but only for three months of the year. Thus, not really contributing too much to the overall advertising for the whole year."
The minimal growth of advertising spending lagged six other markets in Asia and the Pacific, namely: China, which posted a growth of 22% to $47.764 billion; Australia, 2% to $6.719 billion; Hong Kong, 8% to $6.3 billion; South Korea, 2% to $5.7 billion; and India, 23% to $3.691 billion.
Philippine ad spending, however, was still bigger than that of other Southeast Asian markets. Thailand, which came after the Philippines, spent $2.266 billion, up 4% from its ad spend the previous year.
New Zealand experienced a 2% contraction in ad spending, with revenues amounting to $1.764 million, while Taiwan, which also saw a 3% decrease in ad spend, reported 1.46 million.
Malaysia, which grew at the same rate as the Philippines, posted $1.255 million, while Singapore reported the lowest at $1.156 million, also 4% up.
Of the $78.6 billion spent on advertising in the 12 Asia-Pacific markets, television got 19%, newspapers 6% and magazines 9%.
All other media — a category which includes cinemas, outdoor advertising, and pay TV — contributed 10% of the total ad spend.