After the party comes the hangover

Advertising market For daily newspapers in particular, the advertising slump of the last two years has turned into a veritable disaster.

The development curve of gross advertising expenditure over the past ten years is a wild chase - with an abrupt end in 2001. Particularly annoying: In 2000, gross advertising expenditure almost reached the 4 billion mark, with only a good million Swiss francs still missing. But 2000 will go down in the history of advertising spending as the absolute highflyer year, with top results unlikely to be repeated so quickly.A look at the development shows: The period between 1993 and 2000 was one big party. Only in 1996 was there a small slump. But this drop of around 94 million Swiss francs hardly hurt after the glaring profits of the previous years - 1995: plus 261 million Swiss francs, 1994: plus 333 million Swiss francs.
But it was not much more than a short sleep off before the next high. As early as 1997, things started to move forward again - in even bigger steps and without interruption for the following three years. All in all, gross advertising expenditure has risen by an impressive 60 percent or CHF 1.4 billion over the last ten years. This results in an average annual growth rate of around six percent - and this over ten years in a row.
The slump in advertising at the end of the seemingly endless party caught the industry on the wrong foot. This is one of the reasons why the advertising market slump of 2001 and 2002 is perceived to be much worse than it actually was.
Taken together, the Swiss advertising market lost only CHF 235 million in these two crisis years (2001: CHF -134 million; 2002: CHF -101 million). This is actually very little compared to the significantly higher volume growth with which the media had been showered in previous years (2000: +356 million Swiss francs; 1999: +390 million Swiss francs). And there is something else to consider: In 2002, total gross advertising spending was still almost CHF 120 million higher than in 1999.
All in all, things don't look so bad - little Moritz thinks to himself. But appearances are deceptive. The overall downward trend was anything but evenly distributed among the individual media groups. As much as 82 percent of the decline in 2001 and 2002 was accounted for by daily newspapers.
But it was not only in the last two years that daily newspapers lost ground at an above-average rate. A look at the development of advertising market shares over the past ten years (see chart on page 12) also shows newspapers to be by far the biggest losers among all nine media groups.
Within just one decade, the advertising market share of daily newspapers shrank from 51.4 percent (1993) to just
41.7 percent (2002). This development also reflects the fact that daily newspapers were no longer able to profit from the advertising boom in the past boom years to the same extent as in earlier years. In addition, the subsequent advertising slump hit them harder than average.
Other print media have also been hit hard in the last ten years. The number two in the advertising market, general-interest magazines, have seen their share of the market fall from 20 percent in 1993 to 18.5 percent today. However, there is hope that they will catch up, as magazines only recorded minimal losses in 2001 and 2002.
Among the long-term losers were trade magazines, whose market share fell from 6.1 to 5.7 percent over a ten-year period. Not surprising is the poor performance of Internet banner advertising, whose sales almost halved between 2000 and 2002.
Joy children poster and radio
But there are also high-flyers that were spared the slump. These were radio and outdoor advertising. Both grew even in the crisis years. Outdoor advertising - thanks to innovative expansion of its range - even grew particularly strongly (plus 6.9 percent).
Television did not fare quite so well in the past two years - it had to digest a loss of over ten million francs in sales. Nevertheless, over the past decade, television is the clear winner. Its market share rose from 10.6 percent in 1993 to 17 percent today. And television also achieved the absolute top value in terms of revenue growth, up 158 percent to over CHF 639 million.
> Prognos researcher Josef Trappel talks about the future of the media in an interview on page 12.
The ten-year comparison of gross advertising expenditures shows a kink after 2000 for seven of nine media categories.
Print is losing advertising revenue in all categories.
Difference 2000 to 2002 (in 1000 Fr.)
Poster +27 732
Radio + 5 919
Cinema - 1 911
Teletext - 3 821
Consumer magazines - 6 477
Television - 10 832
Internet banner - 14 204
Trade journals - 38 086
Daily newspapers - 194 249
Total - 235 929
Daniel Schifferle

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