26th June 2008
NMA
Digital advertising budgets are being slashed and media agencies claim ad spend forecasts will not be met as marketers cut back online.
A straw poll of media agencies from the NMA Top 100 Interactive Agencies 2007 guide found budgets are under pressure as marketers alter their media plans ahead of the potential economic downturn.
The findings are in conflict with market predictions. A report by analyst firm Enders Analysis this week said UK online ad spend was set to grow to £3.56bn in 2008.
But media agencies told NMA that brand budgets are being cut, with the display market the first to be hit. They said budgets are the biggest issue facing the sector, with fears the recession will knock the sector back to the post-dotcom bust days.
Charlie McGee (pictured), managing partner at MEC Interaction, said, “This is the biggest issue affecting media agencies. With the economic slowdown we’ll have the hardest years since 2002. Digital ad spend is not growing as we predicted.”
Alex Randall, group trading director at Aegis-owned Isobar, said purse-strings have been tightened. “The marketplace is seeing a downturn in ad spend. This is the first time in the last few years that the market has seen such a downturn.”
Media agencies said cuts were being made across the market, with the biggest in sectors that traditionally have large online budgets.
Simon Mansell, MD of digital marketing agency TBG London, said, “We’ve seen a dramatic fall in spend from some clients, notably in the financial services sector.”
Robin O’Neill, head of online trading at full service media agency Group M, said media plans are now focused on areas that are accountable and proven. “People aren’t laying down budgets over the long term. It’s more short-term now,” he said.
Farhad Koodoruth, MD of media agency Blowfish Digital, said, “The next 6-12 months will be hardest. Clients are being more strategic.”
But Adam Pace, head of trading at Opera, said, “Spending patterns are similar to the forecasts at the beginning of the year.”
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