Crisis in Greece: Advertising Is Frozen But Some Consumers Spend

Retailers Benefit From Urge to Spend Remaining Funds Fast

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One of Greece's biggest supermarket chains is providing free bottles of water to people who wait in line to withdraw cash from ATMs.
One of Greece's biggest supermarket chains is providing free bottles of water to people who wait in line to withdraw cash from ATMs.  Credit: Konstantinos Tsakalidis/Bloomberg
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Agencies and marketers in Greece are working hard to stay on track as the country negotiates a debt crisis and its future in--or possibly out of--the Eurozone.

Most ad campaigns have been suspended since June 29 as cash and payment issues cause major problems at agencies and media owners.

According to Giorgos Vareloglou, business development director at Isobar and iProspect in Greece, some broadcasters do not even want to run advertising -- they don't want to be paid for airtime because it would mean stockpiling money in their accounts at a time when its value could decrease dramatically at a moment's notice.

In some cases, he reports, clients are trying to pay agencies, but agencies don't want the money – everyone wants their bank accounts to be as empty as possible until the future is clearer. Greece's banks are currently closed, and if the country exits the Eurozone, it will have to drop the euro and go back to using its own local currency that will likely be worth a lot less due to Greece's damaged and indebted economy.

Giorgos Vareloglou
Giorgos Vareloglou

Social media spending has also plummeted, as brands don't want to risk being part of the heated and hugely partisan debates about the country's future. And an agency exec said that Facebook, which banks through an account in Ireland, has been unable to accept payment for Greek ads because money is not allowed to leave the country, making the site a commercial-free zone in Greece for a few days, although the company is finding ways around the problem.

One of Greece's biggest industries is tourism, and the busy summer season opened with great uncertainty. Travelers leaving England, for instance, were being cautioned to take all the money they would need for their Greek vacation in cash, given the limited access to ATMs.

In a time of crisis, brands are looking for sympathetic ways to connect with consumers, and are thinking about corporate social responsibility. Mr. Vareloglou said, "Most of our briefs now are consumer social-responsiblity-driven, looking for ways to win the moment, to give value and support people."

Sklavenitis, one of Greece's biggest supermarket chains, has won over the nation by providing free bottles of water to retirees as they line up in the Mediterranean heat to withdraw cash from their pensions from ATMs; withdrawals by Greeks are currently restricted to $66 per day. The supermarket has also made another significant and hugely popular gesture by paying its staff in cash, in order to save them from the prospect of long queues to get money.

Greece's biggest price comparison site, Scroutz.gr, has also supported its clients by suspending charges for clicks and customers until the weekend, Mr. Vareloglou said.

Marketers may not be spending on advertising during the uncertainty, but not all sales are suffering. One Greek agency CEO said that people are spending the money they have as they stockpile food, and that supermarkets have seen record sales over the last week or so. Bigger-ticket items -- including TVs, computers, high-end tablets, and even cars – have been selling, as people rush to spend their money while it is still worth something.

One agency group CEO in Greece, who asked not to be named, said that the advertising and marketing industry has been learning to deal with recession and slashed ad budgets since the European Union introduced Greece's first austerity package in 2010. "A good 65% of budgets have been cut since then. Players have already adapted to a much smaller market, so the debt crisis finds operations more streamlined and ready to face the consequences," he said.

Ad spending in Greece totaled $2.58 billion in 2010, but declined steadily after that to $2 billion in 2011, $1.41 billion in 2012, and $1.35 billion in 2013, according to the ZenithOptimedia Advertising Spending Forecast. Advertisers laid out slightly more in 2014, when spending inched back up to $1.46 billion.

There are always people willing to help in a crisis, and two San Francisco-based Greek entrepreneurs, Panos Papadopoulos and Jon Romero, have set up a transaction proxy for Greek startups, which is helping out some of the newer agencies who rely on foreign-based services but cannot transfer money out of Greece to pay for them.

Independent agencies are finding it hardest. Manos Palavidis, CEO of Havas Worldwide Athens, said, "The local agencies I know are closing early for summer and have given their staff a long summer vacation with no pay, hoping that by September things will be better."

For network agencies, the picture is less volatile, thanks to the international support they receive – and there are no controls over bringing money into Greece from other countries, so staff can still be paid.

There is a sense that the country is on hold, as the Greek government waits for a third bailout to prevent an exit from the Eurozone. A European Union summit at the weekend looks likely to decide the country's immediate future.

"There is a numbness across all the staff as we wait to see the outcome of the talks," Mr. Palavidis said. "We've had a decrease in workload of 80% to 90%. Any advertising on TV is mostly pawn shops."

Dominic Lyle
Dominic Lyle

Dominic Lyle, director general of the European Association of Communications Agencies, said "There is great concern and uncertainty, but no panic in agencies for the time being. Agency heads do not want to make redundancies; they do not want to lose talent. It's a wait-and-see – or rather wait-and-hope – attitude until next Monday when negotiations will be concluded, for better or worse."

"My agency is part of a network, so we have stability and support, and access to funds," said Mr. Vareloglou. "We will get to normal again, whether with the euro or another currency, and people will still buy things and drink beer. Life will go on, and in a crisis there are lots of opportunities."