Thursday 16 July 2009

Advertising spend trends in the recession.

For a while it looked like there was no stopping the Internet advertising juggernaut.
In 2008, it accounted for £3,350 million in advertising expenditure -19.3% of all advertising revenue in the UK. Its growth rate was an impressive 19.1% since 2007,when all other media showed a decline of 8.5%.
The reality that has eluded most commentators is that the Internet is in the main a classified advertising vehicle. 77% of its revenue in 2008 came from this form of advertising. Paid for search is its main generator of income. It is the equivalent of yellow pages and Google dominate the market in paid for search.
In a recession all types of advertising suffer.
In 2008, online display advertising - banners, skyscrapers and MPU’s accounted for 5.6% of total display advertising. New estimates from Nielsen Media research suggest that the Internet’s share of display advertising dropped to 3.5% during the first half of 2009.
If this is so, then it’s bad news for mainstream media owners who have led the surge of investment in on-line display advertising infrastructures. Even shrewd newspaper barons bought into Internet ventures like My Space without working out a financial model for recouping their investment. ITV paid a very large sum for Friends Reunited and only now have publicly announced their decision to wash their hands of it.
Quality newspapers have discovered that their on-line readers are younger and more mass market than their newspaper counterparts and as such less valuable.
Newspaper on-line inventory is ending up with blind networks for a fraction of their rate card price.
Advertising Agencies who invested in digital expertise and systems have discovered the days of high margins are over. In truth there is an over supply of online display opportunities. Advertisers once very keen, are now repenting their early enthusiasm.
Another digital collapse is imminent.
This is not to say that Search has had its day. Advertisers with transactional web sites will still exploit the Internet, but they will look for better bargains.
The absurdly high cost of demanded key words, like cheap car insurance, is over.

Friday 3 July 2009

Another year and another travel health scare.

It’s as if the tourism industry didn’t have enough troubles. Everywhere there’s the spectre of recession. The strength of the Euro and the US Dollar, relative to Sterling has adversely affected tourism prospects in the Eurozone and the USA. Airline traffic has fallen in BAA airports by 11.3 % in March 2009 compared to the same month in 2008.
Destinations more dependent on international tourism are acutely aware of how precarious the situation has become. And yet………..
In the UK, householders with tracker mortgages are now much better off, and once the supply/demand equilibrium has been re-established, things will begin to get better for all of us. Recessions end when people get tired of feeling poor and begin to regain their nerve. One sign will be if the two months of March and April 2009 show encouraging airline traffic. Easter was in April this year, so by comparing these combined months in 2009 and 2008, we will cancel out the Easter timing effects.
There are a number of things you can do to mitigate the effects of the recession.
1. Keep in touch with past guests. Most hotels retain addresses and some actually keep in touch at Christmas and on birthdays. Co-ordinate a direct mail campaign with private sector partners and offer special “friends” incentives for them to revisit.
2. Encourage ex-pats to come home for a visit. Scotland has done this in 2009, but doesn’t mean you cannot do so too. Ask them to re-acquaint themselves with the culture, beauty and friendliness of their homeland. Special events could be held in the towns and villages, with local hotels offering special rates. The idea is thank these economic migrants for their financial support.
3. Promote your green credentials In particular, solar technology, re-greening of the towns, country and hill sides, reduction in carbon emissions, marine parks, successes in conservation and so on.
4. Develop your niche markets. Find ways of creating new reasons to visit. Cultural events like jazz festivals, yachting regattas, kite surfing contests, and special golf tournaments such as the ones organised by Dubai.
5. Work closely with private sector partners. Hoteliers, airlines, ground handlers, tour operators and travel agents. India offers incentives to visiting travel agents. Hotels are already offering additional free nights and ground handlers throwing in local excursions for free. Airlines can offer subsidised upgrades and everyone can be encouraged to do more.
6. More than ever, ensure that your country is kept at the forefront of prospective visitor’s minds. Ad spends on tourism products amounts to £441 Million in 2008. Maintain your share of voice and be relevant. Tell prospects that the country is beautiful sure, but emphasise its unique differences. If possible stress affordability. Say visiting is essential, not discretionary. Tell them that a holiday in your country is very special, not a commodity experience.
7. Mount an integrated campaign that joins seamlessly, press relations, above and below the line activity including on-line.
8. And don’t forget to have a well planned and well rehearsed crisis management programme in place. I hope you will never need to implement it.