Advertising spend rises as consumers begin to flash the cash

Irish post-recession consumers are emerging as a mix of flash and cautious

In the first seven months of the year, new car registrations were 30 per cent ahead of the same period last year. Photograph: Carlos Barria/Reuters

In the first seven months of the year, new car registrations were 30 per cent ahead of the same period last year. Photograph: Carlos Barria/Reuters

 

Consumers are – at last – opening their wallets and advertisers are following that money – that’s the core and upbeat message in the AAI/Nielsen Advertising Barometer report for the first six months of this year.

The survey found that the overall advertising market was 7.9 per cent ahead of the first half of 2014 and that spend, year on year across nearly all media, is up.

In the first six months of 2015 TV advertising increased by 11.3 per cent, outdoor by 11.5 per cent and digital by 14.7 per cent. Less good news in radio and print, where the increases were 5.8 per cent and 1.4 per cent respectively. Cinema advertising declined by 16.7 per cent.

“The results are incredibly positive. The market is up 8 per cent year on year and a clear and strong correlation is developing between consumer spending and advertising expenditure,” says Barry Dooley, chief executive of Advertising Association of Ireland, which commissioned the report.

The post-recession consumer, though, is emerging as a curious mix of flash and cautious. In the first seven months of the year, new car registrations were 30 per cent ahead of the same period last year and when it comes to purchases is there anything more showy than a shiny new car in the driveway? In all other sectors consumers are cautious. Take cars out of the mix and the figures show consumers are nervous of other big-ticket luxuries and very price-conscious when it comes to everyday items.

In the first six months of the year, the volume of retail sales was 8.9 per cent higher than the same period in 2014 and 5.5 per cent higher in value terms. And when motor sales are excluded the growth in retail spending is more subdued: in the first six months, the value of sales increased by 2.3 per cent and the volume of sales increased by 5.8 per cent. As economist Jim Power, who wrote the report, notes: “The persistent gap between the growth in volume and value is indicative of the continued difficulty in converting volume growth into cash receipts. Consumers remain very price-sensitive and there is still considerable resistance to higher prices across the consumer spectrum.”

Karen Mooney of Nielsen Ireland says the latest advertising monitor provides tangible evidence of a recovery in advertising spend. “With ad spend being a weather vane of economic recovery, the marketing and advertising industries should be confident in continuing to build investment in 2015 and into 2016.”

And the industry is taking the figures as a positive sign of the things to come. “The overall advertising market should expand by at least 10 per cent this year. This would translate into a market of €1.1 billion,” says Dooley.