The cuts are deep and extend across a broad swath of top marketers. Procter & Gamble slashed its spending by $27.7 million to $82.7 million in the third quarter of 2008, according to figures published by Billetts Media Monitoring. Financial-services giant Aviva knocked $17.7 million off its spending (down to $12.1 million) while British Telecom was down $13.8 million (to $29.9 million) from the same quarter last year.
HOW TIMES HAVE CHANGED: Hovis spot has boy travelling from 1886 to 2008.
TV is particularly badly hit. "The September figures are looking even worse," said Nick Manning, chief operating officer of Billetts' parent company, Ebiquity. "We expect to see a 16.8% year-on-year decline in TV spending."
Mr. Manning said U.K. TV prices are now at 1992 levels, despite the rise in audiences. Consumers are opting for a cheap night in to beat the credit crunch but -- frustratingly for the TV companies -- the marketing money is not chasing the viewers.
This is partly due to the plummeting price of TV airtime, which was down about 25% in the third quarter. Ironically, a 10% increase in audience figures, which are now at their highest level in 15 years, brings the cost down for advertisers. High supply (of viewers) and low demand (from advertisers) have created a deflationary spiral.
Ebiquity expects TV revenue to fall another 6.8% in October, 9.1% in November and 6.4% in December.
"The drop in demand is a function of the credit crunch and the incipient recession," Mr. Manning said. "Advertisers are sharpening their pencils already and cutting back on spend. In a downturn, marketers always spend less on brand building and look for instant results, which is why internet-search advertising is still strong although online display is down."
Chris Locke, U.K. trading director at Publicis Groupe's centralized trading unit, VivaKi, said he agrees that categories such as finance and automotive are spending less but sees the current climate as a great opportunity for many marketers. "There's no one-size-fits-all approach to television advertising," he said.
One category, however, seems to be spending: bread. The category has become a battleground in the past couple of months as supermarkets compete to offer the best prices. VivaKi client Hovis is running a two-minute TV spot. "It's creating a market within a market," Mr. Locke said.
The Hovis spot, by Miles Calcraft Briginshaw Duffy (part of Cossette Communication Group), celebrates Hovis' 122nd birthday with a 122-second spot. In the commercial, a boy buys a loaf of bread in 1886 and travels through time to deliver it home in 2008. Along the way he encounters events including two world wars, the queen's coronation and millennium fireworks.
Mr. Locke sees the low rates as a "big opportunity" for marketers to make full use of the medium without increasing marketing budgets. "TV has never been healthier," he said. "It's a great product, and it's got every demographic covered."
Tess Alps, CEO of TV marketing body Thinkbox, said, "The downturn is horrible for everybody but particularly for TV, because the viewing figures are so good. The bright spot is that sponsorship is going up, and online TV is bringing in new opportunities."
Overall, above-the-line spending -- which includes print and posters as well as TV -- in the third quarter was down about 1% overall, with some categories recording a marked decline. Government and utilities spending was down nearly 20%; and finance was down 12%, while automotive was 6% down. Pharmaceutical was up 7%; and entertainment/media/leisure saw a 6% increase.