Decreasing advertising budgets are just a short term problem

Latest news suggests that advertising budgets are going to fall in Europe like they’ve already done in USA.

The rate of decline “was gathering to a pace not seen since the immediate aftermath of the 9/11 terrorist attacks”. Source: FT.com.

It would be easy to say that it is because of the US led economy downturn. However, simultaneous shift from traditional media to online multiplies the negative effect on the both shores of Atlantic Ocean.

For some individual media owners, feeling the combined effects of the shift to the Internet and the economic downturn, an ad recession has already arrived. Trinity Mirror, a British newspaper publisher, said last month that advertising had fallen 12.6 percent in May and June, following the recent gloomy reports of some American newspaper companies. Source: IHT.

It seems that we will see cost savings and financial crisis management initiatives in Europe too. Next question is, what happens after current economic turmoil, will traditional media regain the revenues they lost or will the advertising budgets be invested to more targeted media? Maybe it is even better to just directly ask: “How big market share traditional media has lost to online before economical recovery starts”?

After all, current decrease in advertising budgets is just a short-term cyclical problems that will pass. Temporary recession, downturn, or slowdown shouldn’t make us to lose focus from the real long-term challenge. The media owners have to find good answers to five change drivers described by Robert G. Picard. They are:

Media abundance, audience fragmentation and polarization, product portfolio development, the eroding strength of media companies, and a overall power shift in the communications process.

Executives who are fighting with declining monthly advertising revenues and can simultaneously find good solutions to live with these drive changers are highly valued nowadays.

Photo above used under CC licence, credits to tuis.