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FMCG ad slowdown tips Europe back into recession territory

Despite an overall increase of 5.7 per cent in global terms, ad spending fell in nearly half the world’s key markets in the second quarter of this year as economic concerns continue to impact the advertising industry, according to Nielsen’s quarterly Global AdView Pulse report.

Nielsen reports that advertising revenue dropped in Q2 in 16 out of 36 global markets – the first significant decline since the Q3 2009 report when adspend fell in more than half the markets monitored at the height of the global recession.

Fast Moving Consumer Goods (FMCG) advertisers cut back most sharply prompting a 3.2 per cent decline in European adspend including 1.2 per cent in the UK.

Asia Pacific was the fastest-growing region at 9.3 per cent with Indonesia the standout at 18.9 per cent.

“Compared to the 8.9 per cent growth rate in the first quarter of the year, there was definitely some slowdown,” says Randall Beard, global head of advertiser solutions for Nielsen. “But, based on the global economy and the financial problems many countries have experienced, a 5.7 per cent increase for quarterly year-on-year global ad spend is still great news.”

Global advertising in Q2 totalled $127bn (mainly based on published rate cards and four major media types), and the first half of 2011 closed with 7.2 per cent growth over the same period in 2010.

Declines in ad spending for the FMCG category in Europe and North America, and the continued decline of newspaper ads, also contributed to slower growth in these regions. However in the USA, the world’s largest ad market, these declines were offset by increases in the automotive, insurance and financial service categories, which contributed to 3.1 per cent overall growth in both the US and North America as a whole.

FMCG advertising posted its lowest quarterly growth since the Q1 2009 Pulse report: four per cent globally with notable declines of 3.6 per cent in Europe and three per cent in North America. The decline in FMCG ad spend was particularly surprising as the Easter holiday, traditionally a key occasion for FMCG and confectionary advertising in Europe and North America, took place in late April this year, which should have pushed more ad revenue to the beginning of Q2.

Within FMCG, cosmetics and toiletries posted the most robust growth of 6.9 per cent and accounted for nearly one in every ten dollars spent globally.

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