THE BOOM has lasted for seven years. Since the early Nineties, annual growth in advertising spending has soared ahead of the expansion in the British economy. Now even the most bullish of media executives admit the slowdown has started, and the only question is the magnitude of the cut-backs.
In the autumn, the ITV companies were the first to warn that advertising revenue growth would decline. Since then the deceleration has swept through the magazine and newspaper sectors. Trinity Mirror, Britain's biggest newspaper group, this week reported a sharp second-half fall-off in ad sales growth.
Within hours it was Yahoo!'s turn to disappoint. This it duly did when it reported that annual revenue growth, which largely depends on banner advertisements and sponsorship fees, is set to tumble from 100 per cent year on year to 10 per cent.
However, a more chilling alarm for media executives was sounded yesterday when AC Nielsen, the survey group, said advertising revenues for the 11 months to November grew at slightly less than the rate of inflation - in other words, a decline in real terms. Moreover, the Nielsen figures show a 5 per cent year-on-year spending decline for Britain's 30 biggest advertisers for the same period.
Jeremy Ridgway, associate director of media measurement services at AC Nielsen, said: "Barring an extraordinary bounce-back in December, it now looks as if total advertising growth for the year will be no more than 4 per cent, which is close to a real-term decline after inflation, a year-end performance well down on the past few years."
More worryingly, some of the largest advertisers made the deepest cuts. The country's biggest advertiser, Procter & Gamble, the consumer goods giant, whose products include Ariel detergent and Pampers nappies, slashed spending by 25 per cent to pounds 114m.
"There is no getting away from the fact that Procter & Gamble spent pounds 40m less," Mr Ridgway said. "It's a big chunk of advertising by any measure."
Other big branded goods advertisers cutting ad spending included Ford, whose ad spending fell by6 per cent to pounds 53m, and Vauxhall, a unit of General Motors, whose spending plunged nearly one-third to pounds 55.6m. Telecoms firms, including Vodafone and British Telecom, as well as the Government, Britain's second- biggest advertiser, went against the trend, spending more. But few would bet, given the rising debt service costs of telecoms firms, that their advertising budgets will escape unscathed this year.
News of the overall spending decline among big advertisers yesterday sapped the share prices of several media and advertising groups. ITV leaders Carlton Communications and Granada Media fell 3.8 per cent to 562p and 2.4 per cent to 415p respectively. United Business Media, a major IT publisher in the US, slid 4.2 per cent to 804p. WPP Group, the leading global advertising and market services group, edged 4.6 per cent lower to 811p, while Aegis, Europe's biggest media buying firm, fell 6.9 per cent to 112p. …