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Advertising pressure bursts TV bubble
20 February 2009
By Larry Ryan
The closure of Irish music television channel Bubble Hits last Friday put the spotlight on the growing pressure within the TV industry as revenues plummet. Bubble blamed a collapse in advertising income for the closure, which came less than a year after the station set up its dedicated Irish service, a much-welcomed outlet for showcasing new home-grown acts.
Reduced consumer spending has hit ad budgets across the board but industry experts accept that television has been particularly badly affected. Paul Moran of advertising buyers Mediaworks – part of the Owens DBB group – suggests that ad pricing has returned to 2004 levels.
“Advertising revenues are more than 30% below figures for the first quarter of last year. Obviously, this puts a strain on the domestic channels who are investing in home-produced programming,” he says.
Of course, there is a silver lining for other industries as prime spots become available at better rates.
Moran comments: “The rewards are certainly there for those advertisers that stick with the medium. With viewing figures up, in real terms prices are 40% down on last year, so there are some real bargains available.”
However, Moran fears that one of the first victims of the downturn will be quality. “In fairness to RTÉ, TG4 and to a lesser extent TV3, there is still significant investment in domestic programming in this country, whether in-house or through independent production companies. The advertising industry is keen to see that commitment to quality continue but obviously reduced revenues will put the pressure on that budget.”
Seán McGrave, chief executive of the Institute of Advertising Practitioners in Ireland (IAPI), suggests that the Government has left the entire industry in the lurch. “Spending is certainly down everywhere – not just in television – and a big part of that is the cut in Government spending. Government is one of the biggest ad spenders of all but they have cut right back so the knock-on effects are seen everywhere.”
McGrave believes that, while cutting public spending on ads looks good, the results are not always considered. “There seems to be an impression that Government can slash ad spend with no consequences, but these cuts can’t be taken in isolation. There are real victims; broadcasters, media agencies, journalists and printers are all affected.”
He adds: “In many ways, we have exactly the kind of industry Government wants here – educated, well qualified, well paid – but, at the moment, we are all feeling the pinch.”
However, Moran believes the picture may not be so gloomy for the rest of 2009. “At Mediaworks, our projections suggest the sector will stabilise over the coming months and the decline will level off. We predict a 16% decline on last year’s figures over the entire 12 months.”
McGrave also sees respite for the sector later this year and this time it may be the Government rushing to the rescue. “Thankfully, we should see an increase in public spending during the summer as the local and European elections take centre stage.”
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