No sustained 2010 spinoff

Johannesburg - Advertising spend was expected to show some positive growth by the last two quarters of 2009 - but that was when the recession was expected to be short-lived, followed by a bounceback. Now a more grimly realistic mood has taken hold.

"Despite a few green shoots, any agency that believes the hard times have passed is overly optimistic," says TBWA group MD Gavin Heron. "The fundamentals are not in place yet. The economy is being constrained by growing unemployment, lower house prices and low consumer spending."

TBWA Group MD Gavin Heron believes the mood might be somewhat buoyant because of a strong showing by the JSE and other positive indicators. There has been some new business movement in recent months, such as Steers and Old Mutual for example. The challenge, according to Heron, is how to grab hold of it.

The MediaShop Group MD Harry Herber describes growth as negative to flat. This is despite the increase in volumes that media owners are experiencing, because of the levels of discounting.

Though the picture looks bleak for some time to come, Herber expresses mild optimism.

Sponsors likely to hog benefits

Even lowered interest rates did not have the desired impact on consumer spending, Odette Roper, CEO of the Association for Communication and Advertising (ACA), weighs in. The 2010 Fifa World Cup was expected to be a beacon of light at this point. "There's been an uptick in industry activity, but at the moment it's focused on sponsors and their campaigns."

It's still too early to see the impact the tournament will have at this juncture. Heron expects 2010 to continue the trend, with sponsors aiming to get the most out of their investment.

He says: "They will have to spend three times their asset to get a return. They will dominate media as prices will most likely become too expensive, as was the case at the Beijing Olympics."

Heron believes those without sponsors or World Cup-affiliated clients are likely to get less business than they would have if there had been no tournament. "Others may choose to retreat."

Furthermore, it will be a good time for the few agencies with the right brands on board, such as TBWA with Adidas and Visa. Herber also expects some growth leading up to the tournament, but it will be contained.

"We will have a bullish first half followed by a bearish one," comments Herber. "There will be a flattening out following the World Cup; and then we will pick up from the third quarter; but any real movement won't happen until 2011."

- Fin24.com