The print media industry is facing its share of the tough economic conditions, with advertising spend showing a mere 3 percent growth at the end of September compared with double-digit figures of last year, and analysts warning that advertisers will look at media platforms that reach a wider audience at a lower cost, such as radio, writes Thabiso Mochiko in Business Report.
Total print ad spend increased by 3 percent, while newspapers jumped by 2 percent to just R4.9 billion.
The tough economic conditions have led to companies cutting back on their advertising budgets as consumers have less disposable income because of the high interest rate.
This has led to media firms such as Naspers putting in place drastic measures such as retrenchments and cutting back on capital expenditure in the print business to cut costs.
The media firm's earnings are boosted mainly by the pay TV business, which depends on subscription fees rather than advertising.
So far this year, total advertising spend has grown by 5 percent to R2.19 billion, compared with R2.99 billion the previous year.
Chris Moerdyk, a marketing analyst, said yesterday that he did not believe too much should be read into ad spend in print media falling in comparison with radio and television.
History has shown that in tough economic times all ad spend tends to drop as marketing budgets are reduced along with other corporate measures to cut costs.
Chris Wildish, the managing director of Leo Burnett, said the circulation debacle of earlier this year had contributed, as it had pulled into focus the fact that clients could not trust that the spend was reaching the right people in the right numbers, as promised by the media owners.
Circulation on daily newspapers dipped 2 percent in the third quarter of this year.
Many titles are affected by the fact that people have less money to spend on "luxuries" such as magazines.
Wildish said: "It is a stark reality that people need to pay for the necessities long before they pay for a 'nice to have', and many of the publications out there fall into that bracket."
However, Wildish said that although the decline in print circulation and a drop in advertising spend for print were not necessarily related, advertisers were looking for cost-effective media to advertise in, which would hit target markets more effectively for less.
"The drop in circulation is, to me, an economic one. People just do not have the disposable income any more," he said.
Although print media are showing a decline, radio advertising is flourishing. Radio advertising rose 17 percent to R3 billion in September.
Television, the biggest and most expensive advertising medium, grew 5 percent to about R6.9 billion.
Moerdyk believes marketers are beginning to appreciate the power of radio, for which the production of advertising material is far cheaper than most other media.
The economic conditions would drive people to more a cost-effective communication platform and away from the printed medium, said Wildish.
Moerdyk said: "Radio is on the ascendancy, as it is easier to hit a broader target group – lower LSM [living standard measure] – far easier and most cost-efficient. It is the mass medium and, as brands have started to identify the need to hit the mass markets, so radio has become that much more relevant and effective."
The best performer was the internet, although its growth was off a low base. That medium grew by 47 percent to about R200 million.
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