Thanks to Spendthrift Politicians, Argentina's Ad Industry Saw First-Half Growth

Chief Among Them Was the President, the Nation's Largest Advertiser

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It's amazing, nearly unbelievable, but politicians have indeed managed to stem -- however briefly -- the tide of crisis Argentine advertising is coping with these days. For the first six months of the year, election-related advertising buoyed the ad economy, with the office of the president, occupied by Cristina Fernandez, becoming the largest advertiser, spending more than any beer, car or dish soap.

The office of the president of Argentina, occupied by Cristina Fernandez, helped buoy the ad economy with election-related advertising.
The office of the president of Argentina, occupied by Cristina Fernandez, helped buoy the ad economy with election-related advertising.
According to a new report from the Argentine Chamber of Media Centers (CACEM in Spanish), advertising investment expressed in Argentine pesos enjoyed a slight increase during the first half of the year, mainly due to investment by stakeholders in the June parliamentary elections. The report shows that from January to June, advertising investment reached pesos 3.742 billion (some $984 million) increasing by 13.7% over the same period in 2008.

Like previous years, TV and newspapers comprised three-quarters of the advertising investment. The fastest-growing media were internet, cable TV and radio in the capital district (city of Buenos Aires), with increases of 37.5%, 35.2% and 31.2%, respectively, taking into account the same period in 2008.

The electoral effect is clear: In the first quarter of the year, open TV showed a decrease of 17%, while in the second quarter it got a 5% increase. It's also worth noting the sharp increase in internet investment for the six months (37.5%). Looked at sector by sector, outlays by political institutions, policy and civil associations were up by 147%, while alcoholic beverages increased spending by 64%, health and beauty cosmetics by 33%, automotive by 31%, and the pharmaceutical industry by 29%. Non-alcoholic beverages were down by 29%; food dropped 25%; and finance and insurance 22%.

So, is Argentina recovering from the downturn its ad sector is suffering since some years ago? The picture doesn't look pretty.

In a white paper prepared exclusively for Ad Age, CACEM investment commissions head Manuel Galindo found that, historically, elections have not significantly increased investment in advertising for the long term. The conclusions are based on analysis of the last three national elections going back to 2005, analyzing the investment in the months before and after the election, compared to the same months of the prior year.

"In the latest election [June 2009] the increase in investment is remarkable: from 13% in May, it jumped to 24% in June. While details have not yet closed in July 2009 with an estimate on TV and newspapers over the capital district [the nation's biggest], we cannot see a sustained growth over the previous year. And if we see the evolution of the previous months of 2009 against 2008, the average increase was 13% month to month, in no way close to 25%", he explains.

Why, then, this this sharp increase in ad spending? A new player is in town, says Mr. Galindo, pointing to what he calls the "Mondo Politico," or the sum of major political institutions in the country.

"The most interesting issue around this is to see" the evolution of the "Mondo Politico" during elections as a major player in the market, says Mr. Galindo. Its media investment rose from 5.9% in 2005 to 9.2% in 2007 and reached 17.3% in the last election.

And he points to one particular institution that became the nation's biggest ad spender: the office of the president of the nation, which jumped from the ninth advertiser in the country in the first half of 2008 into first place in 2009, accounting for 41% share of the industry and far beyond the budget of the six major political parties.

In 2008, the Argentina's supreme court stated that public advertising cannot discriminate between outlets based on whether they're favorable. What the government at all levels did was send advertisements to friendly media outlets and asphyxiate those that opposed them. Before the court's decision, the newspaper Perfil, one of the most combative, even had to create a fiduciary fund where readers could donate money to support the paper.

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