Advertising spend trends in the recession.

For a while it looked like there was no stopping the Internet advertising juggernaut.
In 2008, it accounted for £3,350 million in advertising expenditure -19.3% of all advertising revenue in the UK. Its growth rate was an impressive 19.1% since 2007,when all other media showed a decline of 8.5%.
The reality that has eluded most commentators is that the Internet is in the main a classified advertising vehicle. 77% of its revenue in 2008 came from this form of advertising. Paid for search is its main generator of income. It is the equivalent of yellow pages and Google dominate the market in paid for search.
In a recession all types of advertising suffer.
In 2008, online display advertising - banners, skyscrapers and MPU’s accounted for 5.6% of total display advertising. New estimates from Nielsen Media research suggest that the Internet’s share of display advertising dropped to 3.5% during the first half of 2009.
If this is so, then it’s bad news for mainstream media owners who have led the surge of investment in on-line display advertising infrastructures. Even shrewd newspaper barons bought into Internet ventures like My Space without working out a financial model for recouping their investment. ITV paid a very large sum for Friends Reunited and only now have publicly announced their decision to wash their hands of it.
Quality newspapers have discovered that their on-line readers are younger and more mass market than their newspaper counterparts and as such less valuable.
Newspaper on-line inventory is ending up with blind networks for a fraction of their rate card price.
Advertising Agencies who invested in digital expertise and systems have discovered the days of high margins are over. In truth there is an over supply of online display opportunities. Advertisers once very keen, are now repenting their early enthusiasm.
Another digital collapse is imminent.
This is not to say that Search has had its day. Advertisers with transactional web sites will still exploit the Internet, but they will look for better bargains.
The absurdly high cost of demanded key words, like cheap car insurance, is over.

Another year and another travel health scare.

It’s as if the tourism industry didn’t have enough troubles. Everywhere there’s the spectre of recession. The strength of the Euro and the US Dollar, relative to Sterling has adversely affected tourism prospects in the Eurozone and the USA. Airline traffic has fallen in BAA airports by 11.3 % in March 2009 compared to the same month in 2008.
Destinations more dependent on international tourism are acutely aware of how precarious the situation has become. And yet………..
In the UK, householders with tracker mortgages are now much better off, and once the supply/demand equilibrium has been re-established, things will begin to get better for all of us. Recessions end when people get tired of feeling poor and begin to regain their nerve. One sign will be if the two months of March and April 2009 show encouraging airline traffic. Easter was in April this year, so by comparing these combined months in 2009 and 2008, we will cancel out the Easter timing effects.
There are a number of things you can do to mitigate the effects of the recession.
1. Keep in touch with past guests. Most hotels retain addresses and some actually keep in touch at Christmas and on birthdays. Co-ordinate a direct mail campaign with private sector partners and offer special “friends” incentives for them to revisit.
2. Encourage ex-pats to come home for a visit. Scotland has done this in 2009, but doesn’t mean you cannot do so too. Ask them to re-acquaint themselves with the culture, beauty and friendliness of their homeland. Special events could be held in the towns and villages, with local hotels offering special rates. The idea is thank these economic migrants for their financial support.
3. Promote your green credentials In particular, solar technology, re-greening of the towns, country and hill sides, reduction in carbon emissions, marine parks, successes in conservation and so on.
4. Develop your niche markets. Find ways of creating new reasons to visit. Cultural events like jazz festivals, yachting regattas, kite surfing contests, and special golf tournaments such as the ones organised by Dubai.
5. Work closely with private sector partners. Hoteliers, airlines, ground handlers, tour operators and travel agents. India offers incentives to visiting travel agents. Hotels are already offering additional free nights and ground handlers throwing in local excursions for free. Airlines can offer subsidised upgrades and everyone can be encouraged to do more.
6. More than ever, ensure that your country is kept at the forefront of prospective visitor’s minds. Ad spends on tourism products amounts to £441 Million in 2008. Maintain your share of voice and be relevant. Tell prospects that the country is beautiful sure, but emphasise its unique differences. If possible stress affordability. Say visiting is essential, not discretionary. Tell them that a holiday in your country is very special, not a commodity experience.
7. Mount an integrated campaign that joins seamlessly, press relations, above and below the line activity including on-line.
8. And don’t forget to have a well planned and well rehearsed crisis management programme in place. I hope you will never need to implement it.

The land of wonder.

Australia is truly a land of wonder, but it’s not an easy sell to British tourists. It shares a problem with another attractive country – New Zealand.
Their distance from the UK makes short holidays impractical, which explains why the British holiday taker spends an average of six weeks in either country. Many of those long stay tourists are from both ends of the age divide, young backpackers and retired folk with time to spare.
Australia has had problems with its communication in the recent past, most notably about objections to their “Where the bloody hell are you?” campaign.
I rather liked it. It was brash and very Australian, but enough people objected and it was withdrawn, underlying the case for pre-publication ad research.
Australia’s visitors from Britain numbered 493,000 in 2008, exactly 100,000 less than in 2006. New Zealand, despite some attractive and persuasive ads lost 25% of British tourists in the same period.
Both countries need something special in their communication policy, and Australia has started its journey of innovation.
Hamilton island is a beautiful island off the Great Barrier Reef and has been the setting of two films screened across the world: “Muriel's Wedding “ and “Fool's Gold “. In August, the island hosts the popular week-long yacht races in which 150 boats compete, culminating in a big beach party on Whitehaven day.
The Queensland government decided Hamilton Island needed a caretaker.
Ben Southall won the challenge. He beat 35,000 other hopefuls and will spend six months on the idyllic island off the Great Barrier Reef, Australia.
Mr. Southall will have his romantic stay shared by his Canadian girlfriend and get paid a whopping 75,000 Aussie dollars to boot. His job is to swim, snorkel, explore, relax and occasionally write a blog about his positive experiences.
The real winner is of course the Australian tourist board, who have garnered tons of free publicity worldwide, estimated at $100 million Australian dollars, on television and in the press. Queensland’s premier Ms Anna Bligh, no relation to the infamous Captain of the Bounty, said it was the most successful tourism campaign in history.
This PR exercise will be backed by an ad campaign worth $1.7 million.
No one could possibly object to this stunt and many, including me, will applaud and wish Queensland every success

Recession or the slippery slope to disaster?

The news is bad and gets worse each day. We have moved from a subprime problem that only affected the feckless and the poor who the financial sages said “should have known better”, to a full blown financial crisis orchestrated by the clever chaps in banking circles who taught us that not only was debt good, but that it was essential to the global economy.

Now governments are rushing to rescue these financial institutions in the USA, the UK, Germany and China. Other European legislators are cautiously pointing to flaws in this type of support. They encourage risk taking without pressing for better and tighter regulations. Giving money to people who cannot pay their mortgages only delays foreclosure and even governments can only borrow so much.

Commentators in London expect that Government borrowings will rise from £63.3 billion in 2008/9 to £90.1 billion in the next financial year. This means that debt will exceed 43.3 % of the gross domestic product by 2010/11, considerably higher than the so-called sustainable investment rule, which stipulates a ceiling of 40%.

For people, anxious to get onto the housing ladder the news is mixed. House prices are down by nearly 15%, but lenders are being more cautious and demand higher deposits. Homeowners who don’t have an urgent need to sell are staying put. The results-an even greater fall in approved mortgage applications of about 40% in August.

Imported inflation on fuel and food prices are adding to the general gloom and most people are feeling poorer. They have responded by reducing their driving mileage, switching off the lights, turning the thermostat down a couple of degrees and shopping more in discount stores.

In the travel industry, the fall-out includes airlines like EOS, MAXJET SILVERJET, ZOOM and XL. Fuel is the highest single cost for airlines so expect further failures, consolidations, closures of routes and flight cancellations. Even national airlines are not exempt, as Alitalia’s troubles make clear.

Tour operators are consolidating but as Thomas Cook and TUI are finding out it is difficult to raise the standards of rescued companies to that of the White Knight.

Carbon emissions are a handy excuse to reconsider travel abroad, though the terrible British summer of 2008 might cause people to reconsider the domestic option.

So whilst Spain may suffer, Turkey and countries further east, with reputations for good value may fare better, particularly now that more efficient aircraft like the Airbus 380 and the Dreamliner are coming on stream.

The British love their holidays and will be loath to abandon their trips to sunnier climes. However unemployment or the fear of redundancy may make people reassess their priorities. Now it is even more important to keep your Brand top of mind when planning your marketing campaigns.

Do countries need a brand identity?

Australia is apparently rethinking its advertising approach to tourism. Some countries were upset by the current advertisements which ask: “Where the bloody hell are you?”.

Personally I liked the line. It has the brash good humoured charm we expect from our friends down under. Anecdotal evidence suggests that most British people also found this appeal credible and persuasive. However this acceptance was not matched in Japan who now send fewer tourists to Australia.

It proves that culture and customs are still different across the world,
even in today’s global village.

Perhaps the British attitude is informed by our shared history and
their ready willingness to fight by our side in two bloody world wars.
They sacrificed a lot of young men to help protect their cousins half the earth away.

Now the Australian authorities are to develop an all encompassing
brand identity which will hopefully reflect all the positive elements
that make the country what it is.

A country’s image is affected by its geography, geology, history, people, politics, economy and its position in the world. Branding a country is therefore a complex task, since we are talking not just about tourism, but also exports, off shore banking, foreign and domestic policy, inward bound investments, culture and
heritage.

The danger is projecting an identity that conflicts with current
perception. Psychologists call this ‘cognitive dissonance’.

Countries that need a new and credible image, need to adapt rapidly and there is usually not the will or resources to do it.

Consider three countries as examples.

Sri Lanka is an ancient land, culturally interesting with a strong rooting in Buddhism. It offers great value for tourists, wide sandy beaches, wild elephants, but once again in turmoil because of the actions of the Tamil tigers.

China is a huge country, accounting for a quarter of the world’s population. Many peasants are poor, though there is a burgeoning urban middle class. It is home to one of the great civilisations but currently ruled by a repressive totalitarian regime with a bad human rights record at home and in Tibet which they occupy illegally. They are the hosts for this years Olympics and have just suffered a calamitous earth quake.

Indonesia has the worlds greatest concentration of Muslims and a source of militant Islamism. Bali, is one of their beautiful islands, inhabited by gentle Buddhists and favoured by Australian tourists. It was targeted twice by terrorists.

Perhaps all most countries need is correct positioning for each of their many target sectors.

New Zealand provides incentives for film makers. Much was achieved by the shooting of the ‘Lord of the Rings’ trilogy, which was watched by millions all over the world.

The ad concept of ‘Pure’ is simply true and stronger for the lack of hyperbole.

Egypt cleverly positioned their Red Sea resorts by describing the strip as the Red Sea Riviera. This succeeded in shifting the perception of the place from the Middle east and all that implies to Europe, safe and sophisticated.

Branding a country with a universal message may be very difficult.

Repositioning a country differently for its different targets may be all that’s needed.

Tourism - a bumpy ride ahead?

The tourism industry is set for a turbulent time.

Oil has just reached a record high of $120 per barrel. Ethanol production, touted as the green alternative has now attracted criticism as the cause of lower food production and subsequent higher prices. Butanol, Richard Branson’s alternative fuel aircraft may be a passing phenomenon.

More serious is the growing consciousness that human activity is the cause of global warming, serious storms and human tragedies. Flying is believed to be the worst offending act. Since giving up holidays completely is not an option, ways of salving our green conscience will be sought. One way is taking at least one holiday each year in the UK. Kelkoo, a price comparison site reports a 39% increase in the number of people searching for UK holidays.

For overseas destinations however, a demonstration of the measures being taken to combat global warming is required. Tropical countries should be getting more of their energy needs from the Sun with solar panels and photo voltaic cells. Another renewable source is hydro-power. ICELANDAIR trumpets their green credentials in their advertising: “Discover the source of green energy”, is the headline with an image of waterfalls.

Another measure is offering greener vehicles, particularly for tourists. Hertz has a green collection of cars that meet the EU’s 2008 voluntary target of 140g/km C02 Output. Avis offers natural gas cars in Germany and Hybrids in Portugal. The real breakthrough may be in Electric cars. Carlos Ghosn, the Chief Executive of Nissan has embarked on an ambitious plan to dominate this sector by the year 2012. He is confident that improved batteries and the problem of speedier re-charging will be solved soon. The country that adopts this technology will reduce smogs caused by traffic jams and generally improve the quality of the air.

Planting more trees is another ideal. A Swedish tour operator has bought land in Malta and plants one tree for every tourist he flies in. Governments should not rely on such generosity. Sugar cane fields should be bordered by long lasting trees like jacaranda, and Le flamboyant for beauty and Tamarind, Neem and Jamboul for usefulness. Such a strip would have the added advantage of being a fire break. Off shore and uninhabited islands could be made green havens to encourage endangered bird species and wherever possible new mangrove plantations could be created to make habitats for fish nurseries.

Governments could also provide incentives for hoteliers who provide green eco-friendly resorts. According to the Sunday Times Travel magazine, The Jet wing hotel in Sri Lanka recycles its waste and pays local farmers to produce organic produce.

The idea of getting local people to benefit is a good thing. The Feynan Eco lodge in Jordan is run on solar power and is run by Bedouin in collaboration with Jordan’s Royal society for the conservation of nature. The ll Ngwesi is an eight room thatched lodge in Kenya’s uplands that also runs on solar power. The Masai who help manage it get 40% of the profits.

The time has passed when tourist boards had only to organise themselves for growth. Growing tourist numbers or even maintaining your share will depend on how efficiently you anticipate social and political trends and prepare for them.

Are we talking ourselves into a recession or are we already in one?

Recessions are usually characterised by a decline in economic activity over three quarters.

This is typically accompanied by falls in consumer confidence and spending, caused by price inflation, rising unemployment and a bear stock market.

The stock market has more red ink than black and share prices in sectors such as banking, property and retail have taken a particular pounding. Financial companies, particularly those involved in the USA’s sub prime shambles have suffered badly.

Some might say that their plight has more to do with greed, fraud and incompetence than general economic woes.

And a correction in house prices has been anticipated for at least two years when the ratios between wages, rents and house prices began their journey into economic craziness. The Economist in 2005 said that prices would fall by 20%, proving again that it is possible to forecast events or timing, but rarely both correctly.

Problems in the high street are being presented as another indicator of the recession and though Marks and Spencer has had a decline of 2.5 % in their Christmas sales, John Lewis at one end and Primark at the other have done well. Online sales are on the up.

So what is really happening?

Unemployment is falling. Oil prices as defined by Brent Crude are 10% down on the $100 dollars a barrel threshold. Inflation is still a risk which is why interest rates remain on hold. If consumers rein in their spending it will be no bad thing and if savings ratios start rising again, that’s all to the good.

In the advertising industry, a slump in ad spend is indicated by the IPA’s Bellwether report. Advertising activity is a function of corporate liquidity and consumer spending.

Previous recessions point out the dangers inherent in reducing communication investment in times of economic slowdowns. It will be even more damaging now that we have more knowledgeable and empowered consumers.

But advertising weight alone is not enough, nor clever creative advertisements.

Emulate Steve Jobs whose Apple showroom in Regents Street is one example of how to do it correctly. Give people what they want and they will besiege your store.