While analysts had been predicting that television advertising would have a bumper year, the fallout from Brexit has led to companies slashing their marketing budgets by more than £400 million.
The cut to marketing budgets comes after companies have become nervous about what a hard Brexit will mean to the economy. This has led to broadcasters bracing themselves for the worst year since 2009, at which time companies spent their lowest amount on advertising due to the recession of 2008.
It had been expected that TV advertising would rise by more than seven per cent to around £4.7 billion before the results of Brexit were announced. However, a huge swing in the opposite direction could mean that advertising revenue is actually down by one to two per cent on the figure for 2015.
Since the slump in revenues back in 2009 when companies reduced marketing budgets and broadcasters saw a fall of around eleven per cent, TV advertising has been steadily rising year on year. Ad revenue in 2009 was £2.98 billion compared to £4.37 billion in 2015. It was expected to hit the £4.7 million mark in 2016, but forecasters are now predicting that it could drop to around £4.28 billion instead.
One TV executive explained, "Since about four or five weeks ago, things have got very tough. It is not structurally about the TV advertising model versus other media such as online. TV ad spend is healthy in other markets; here it is about fears over Brexit hurting the market."
The figures for October look to be down by around five per cent on those for last October, and early estimates are suggesting there could be a sharp drop of around four per cent in the fourth quarter of 2016 compared to 2015.
According to a senior advertising executive, "It's difficult to see how even a bumper Christmas spend will save 2016's figures, which at the start of the year were predicted to be very strong. It looks like it will be a big fall versus forecasts and at this point, 2017 looks like it will contract as well."
While television advertising is very effective, it is also very expensive, so it is no big surprise that many companies are wary about how much they spend on marketing in the wake of the Brexit vote. However, there are very effective alternative methods to advertise products and services.
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