“While most overseas advertising markets were already in meltdown by mid 2008, the impact was not clearly evident in Australia until later in the year. When consumer and business confidence was declining in late November and exports /commodities trading were drying up, rapidly softening economic conditions led to more cutbacks in jobs, and for many organisations, forensic cutbacks in advertising activity,” said Peter Cornelius, Managing Director Media for The Nielsen Company Pacific.

Not surprisingly, main media ad spend activity reflected this spiralling demand trend, with the financial year finishing an estimated 6.2% behind the corresponding period in 07/08.  However, the 08/09 financial year was really a tale of two halves. The first half (July – Dec ‘08) was down only 2.3% on the same period in 2007. The second half of the financial year (Jan -Jun ‘09) took the full brunt of the economic downturn with a decrease of almost 11% versus the same period in 2008. It is this ‘low’ base the industry will be watching very closely as media trading improves in line with the much anticipated future economic recovery.

Ad Spending in Australia’s main media, FY 08/09 vs. FY 07/08

Major Advertising Categories Overview

The top 10 Major advertising categories account for 71 cents in every main media ad dollar invested and provide vital indicators on the health of the advertising and media markets.

This is particularly significant when reviewing retail, Australia’s largest category which accounted for more than 21percent share of media spending. The Government’s stimulus packages in early 2009 helped renew confidence among retailer advertisers who promoted heavily to encourage consumer sales. Remarkably, in this economic downturn, retail advertising recorded a minimal 1.1 percent decline YOY to $2 billion.

Australia’s Top Advertiser Groups / Advertisers Overview

The Top 25 advertisers accounted for 21 cents of every main media advertising dollar invested in the financial year. The sectors which were most representative of this elite group of advertisers were Retailers (5), FMCG (4), Motor Vehicles (4), Governments (4) and Telecommunications (2).

The country’s dominant media advertiser group was Wesfarmers Limited, incorporating some of Australia’s foremost retail chains including Coles Supermarkets, Target, Kmart, Bunning’s Hardware, Officeworks and Liquorland. The group finished the financial year with an estimated $220 million spend, just 2.1percent behind 07/08.

Harvey Holdings was the 2nd ranked top Advertiser and performed strongly in what was considered a difficult year for Retailing and advertising generally. With a 4.6 percent increase to an estimated $135 million spend, the group lifted 2 spots from 4th position last year. Also stepping up two positions was 3rd ranked Woolworths Limited, substantially increasing their main media advertising presence by 8.7 percent to $134 million.

Will there be an early Australian advertising recovery?

At the time of writing in September 2009, the financial analysts’ debate continues as to whether Australia ever was officially in recession, although strong retail figures suggest that this may have saved the economy from tipping into one. However, Australia’s economy appears to have begun to rebound with greater speed and resilience than most overseas markets. There remains a cautious attitude among media and marketing sectors about a significant recovery before the end of 2009.  However, as our fiscal year ad spend estimates reflect, and taking into account a soft first six months of 2009, advertising activity may need time to recover and rise into the black.

Certainly, our studies support the theory that those who advertised through the tough times have maintained their competitive advantage as the economic climate improves. Marketing dollars spent during a downturn have less competition for eyeballs, so those who cutback may face even bigger challenges winning back consumers’ hearts and minds.

But the biggest change has come from high-income households.  Prior to the crisis, about 40 percent said that they saved most of their money; now, 52 percent indicate that savings accounts are their preference, while investments lost 7 percent. 

Of those who are still investing their money in the market, stocks continue to be the popular option, with 48 percent indicating equities as their top choice, followed by mutual funds (27%) and properties/real estate (14%).

“Singapore has always been amongst the top three countries in Nielsen global surveys in terms of the number of people expressing their intention to save their spare cash.  We are definitely a cautious lot who are more comfortable putting our hard-earned money in fixed deposits and saving for a secure tomorrow,” said Joan Koh, Executive Director, The Nielsen Company Singapore.

The survey on finance management polled 921 Singaporean adults aged 18 and older to find out how they apportion their disposable funds prior to and after the onset of the global economic crisis.

When asked about their own banks, insurance companies and investment firms, 55% of respondents who said they had seen more advertising for their financial institution reported having “complete confidence” in the financial health and soundness of their financial company and only 18% said they had “little or no confidence” in their company. However, among those who said they had seen less advertising, only 18% had “complete confidence” in their financial company and 45% said they had “little or no confidence” in their company. Overall, a minority of respondents said they had “Complete Confidence” in their financial institutions.

Watch Nielsen’s Alan Gould, Richard Khaleel and James Russo discuss the impact of financial advertising on consumer confidence.

“This research shows that ‘out of sight’ can mean ‘out of business,’” said Richard Khaleel, EVP of Nielsen IAG’s Financial practice. “The current economic climate makes it more important than ever for financial institutions to bolster confidence among their clients and this study clearly demonstrates the link between advertising and confidence levels. With constant scrutiny on the industry it’s clear that taking control of the message in advertising and press can make all the difference for a brand.”

Reduced Spending Meets Lack Of Confidence

The study comes as data show year to year reductions in advertising expenditures in the financial services and insurance categories. Year over year ad spending on financial services and insurance was down 13.4% in 2008 compared to 2007. The drop off was even sharper (-23.3%) for the 4th Quarter of 2008 vs. the same period in 2007.

When asked what factors would increase confidence in the safety and soundness of their financial institution, respondents cited:

• Seeing regular advertising for that institution (25%)
• Receiving regular mail or email offers from that institution (25%)
• Regularly seeing internet offers/advertising from that institution (21%)
• Reading positive stories in the press about that institution (44%)

For more detail, download the complete press release.

Overall in November, trips to retailers declined by 2.9% from the previous year.

Retail Channel Trends
Toy stores, electronics stores, and department stores saw the most dramatic declines in the number of shopping trips last month vs. a year ago.  Trips to toy stores dropped by 23%, trips to electronics stores were down by 21%, and trips to department stores fell by 17%, Nielsen reported.

Retail channels offering low prices and strong value fared the best during November.  Trips to dollar stores (+6%), online retailers (+4%), supercenters (+2%), and club stores (+1%) showed the only year-over-year increases in trip growth rates.

Private Label Trends
In October, value-minded consumers increasingly shifted their purchases to private label products, as the U.S. economy weakened.  Unit sales of private label brands grew by 5% in October — up from 2% growth throughout the past year.

Meanwhile, unit sales of branded products showed a mirror opposite trend, with growth declining by 4% in October after showing an overall 2% decline during the 52-week period ending November 1.  As the U.S. economy slipped further in the third quarter and continued to slide in the fourth quarter, unit sales of branded products worsened in every grocery department — except frozen foods.

In terms of dollar sales, private label products maintained steady 10% growth in October – a trend that has remained constant throughout the past year.  Private label alcoholic beverages, fresh and packaged meats, fresh produce, frozen foods, and dry grocery products saw the fastest dollar sales growth in October.

In contrast, overall sales growth for branded products slipped to 2% — down from 3% during the 52-week period ending November 1.  Although still growing, sales of branded dairy, deli, and fresh produce experienced the greatest declines in dollar sales growth.  Sales of general merchandise products dropped markedly in October and during the 13-week period ending November 1.

Given the continued weakening of economic conditions, Nielsen expects this behavior to intensify in December and into 2009.

Nielsen’s Tips For Manufacturers, Marketers, and Retailers
-Exploit new growth areas: consumer appetite for at-home products, basic necessities, and good values will only intensify.

-Don’t assume consumers are not willing to pay a premium: price is important, but delivering a clear value proposition is more critical.

-Protect your turf: manufacturers should work proactively with their retail partners on branded vs. private label shelf-set rationalization.

-Companies that maintain sales and marketing efforts during recessions typically enjoy better post-recession growth: now is the time to utilize advertising to build customer loyalty and differentiate your brand.

Stay tuned on Nielsen Wire for regular updates on U.S. retail trends and other key economic indicators.

New technologies have revolutionized the way brands are marketed — today’s consumers have more information on brands, and companies, in turn, have more information about their consumers. 

But according to brand guru Kevin Lane Keller (photo at left), E. B. Osborn Professor of Marketing at the Tuck School of Business at Dartmouth College, one key marketing strategy remains unchanged. 

“The most important message for marketers these days is to make sure they have a deep, rich understanding of consumers and how they think and feel about brands and their products and services,” Keller noted in a recent Nielsen Q&A on current trends in brand marketing.  “It is so fundamental and may seem obvious, but unfortunately many marketers still fall way short on that score.”

In his discussion with Nielsen, Keller also offered tips for designing and implementing brand equity measurement systems, making wise marketing investments during the current economic crisis, effectively integrating traditional brand building approaches with emerging online marketing strategies, and finding fresh, new ways to create compelling brand positions via emotional appeals.

Keller’s textbook, Strategic Brand Management, is widely used at marketing and business colleges worldwide.  In conjunction with Professor John Roberts of the University of New South Wales, Keller helped Nielsen develop Winning Brands, a solution that tracks the underlying strength of relationships between customers and brands.

Read Nielsen’s full interview with Kevin Lane Keller.

According to Nielsen Claritas, they might start by taking a closer look at large, fast-growing metro areas, like Atlanta, Dallas, and Phoenix. 

These three markets ranked as the top three fastest growing U.S. markets in the last eight years — and could offer the retail industry some hard-to-come-by expansion opportunities, Nielsen reported in a new study released Monday.

“While some of these markets like Phoenix and Los Angeles have been hard hit by the recent wave of foreclosures, there has been no mass exodus from these markets or anywhere else.  People who have foreclosed most likely have not left the market but rather have just become renters,” Mike Mancini, Vice President of Data Product Management, Nielsen Claritas, and co-author of the new study, noted.  “Faltering markets, such as these, will likely rebound and continue to grow — and their underlying demographics are solid.”

As part of the study, Nielsen also identified seven key factors that correlate strongly with fast-growing, high-potential retail markets:

1) large land areas
2) booming suburban rings
3) widespread affluence
4) a growing Hispanic population
5) diversified employment
6) long commutes
7) the presence of lifestyle shopping centers

These indicators can be combined with demographic projections to identify markets that are likely to lead the way to economic recovery in the coming years.

In the meantime, according to Nielsen’s study, retailers looking for expansion opportunities should focus on booming college towns and resort locations, like Las Vegas, Austin, Texas, and Bend, Oregon; underdog college towns, like Columbia, Missouri, Corvallis, Oregon, and
Greensboro, North Carolina; knowledge worker havens, like Los Alamos, New Mexico, San Jose, California, Boulder, Colorado, and Minneapolis; and up-and-coming communities, like New Orleans, Coeur d’Alene, Idaho, and Brownsville, Texas.

View the study and accompanying press release and presentation. 

Download Nielsen Claritas’s October 30 Webinar, “New Leading Indicators of Growth — Finding Opportunity in a Slow-Growth Environment.”

Learn more about finding growth in challenging times, in the December issue of Nielsen’s “Consumer Insight” online newsletter.

Declines were especially steep during the last four weeks of the quarter, which saw the collapse of Lehman Brothers, the near-collapse of Merrill Lynch, and the government bailout of AIG.

Traditional mass retailers (excluding supercenters), department stores, and office supply stores saw the most dramatic declines in the number of shopping trips last quarter vs. a year ago.  Trips to mass retailers dropped by 9.1%, trips to department stores were down by 8.9%, and trips to office supply stores fell by 7.9%, Nielsen reported.

Retail channels offering low prices, strong value, and mostly “need to have” products — versus “nice to have” items — fared the best during Q3 2008.  Trips to online retailers (+7.5%), supercenters (+3.6%), and dollar stores (+3%), for instance, showed the largest increases, compared with Q3 2007.

More affluent consumers looking for bargains drove the growth in trips to value retail channels, while lower-income households adopted more drastic cost-cutting measures, eliminating shopping trips entirely, according to Nielsen.

U.S. consumers surveyed by Nielsen in late September and early October also reported having significantly less discretionary income than their global peers. 

Almost 25% of U.S. consumers reported having no spare cash after covering their essential living expenses.  In comparison, just over 10% of consumers worldwide reported a similar lack of expendable income.

U.S. consumers were also more likely than consumers worldwide to use expendable income to pay off debts, Nielsen found.  More than 35% of U.S. consumers reported using their spare cash for debt payments, while only 30% of consumers worldwide reported the same.

In early October, Nielsen’s holiday retail forecast estimated that 85% of U.S. consumers plan to spend the same or less on holiday shopping, versus 2007.

Stay tuned on Nielsen Wire for regular updates on U.S. retail trends, and other key economic indicators.

While 53% of those surveyed by Nielsen think their country has hit a prolonged recession that will last more than 12 months, 18% of consumers, concentrated in a handful of emerging markets, like India, Vietnam, China, and Russia, told Nielsen they expect their countries to be out of recession within the next 12 months.

In contrast, consumers in Japan, Germany, Argentina, Mexico, Turkey, Italy, Taiwan, the U.S., and Spain were the least optimistic about the prospects for quick economic recovery.

Nielsen surveyed 28,663 Internet users in 52 markets across Europe, Asia Pacific, the Americas, and the Middle East between September 22 and October 6, 2008, as part of its Global Online Consumer Survey.

The survey’s results reveal that global consumer confidence fell to a new low this month, dropping from an index of 88 in May 2008 – previously the lowest index on record – to 84 in October, according to Nielsen.  Only Brazil, the Philippines, New Zealand, China, Thailand, South Africa, and Hungary showed improved consumer confidence, compared with May 2008.

Not surprisingly, consumers worldwide are adopting new strategies to reduce discretionary spending and shore up household finances.
 
On average, 49% of global consumers plan to spend less on new clothing, as well as gas and electricity, according to Nielsen. 

Meanwhile, 47% report reducing out-of-home entertainment, 40% say they’ll delay upgrading to new PCs and mobile phones, and 39% will cut down on take-away meals from restaurants. 

Even necessities, like groceries, are on the chopping block — 36% of global consumers report switching to cheaper grocery brands in order to reduce their expenses.

Overall, consumers in Australia, New Zealand, Germany, the U.K., Turkey, the U.S., Colombia, and Argentina plan to make the most changes in their spending habits, as they search for ways to weather the current economic turmoil.

View the full press release.

Read a related press release on consumer confidence in Hong Kong and Great Britain.

Read coverage of Nielsen’s findings by Sky News and in the Shanghai Daily, the Business Standard (India), Forbes, the Financial Times, The China Post, the Thanh Nien Daily, and the Malaysia Star.

Learn more about global consumer confidence levels in the December 2008 issue of Nielsen’s “Consumer Insight” online newsletter.

An analysis of GM-related online buzz between September 1 and October 24, 2008 found that consumer chatter on Internet message boards and blogs has focused on how Detroit would change if GM and Chrysler joined forces — and which vehicles might survive the merger.

GM’s forthcoming electric car, the Chevy Volt, also drove a significant portion of GM’s online buzz during the last two months — as did discussions of plant closures, the United Autoworkers union, and the company’s 100th anniversary.

View Nielsen’s proprietary Brand Association Map (BAM) for GM, which charts the attributes most closely associated with the company in online discussions.  The BAM analysis provides an unaided, unsolicited, real-time barometer of consumer perceptions of and attitudes toward a topic discussed online.

What are your thoughts on a GM-Chrysler merger?  Submit your comments below.

After several years of 20% to 30% sales growth, U.S. sales of organic products are showing the first signs of slowing.

While 52-week dollar sales of UPC-coded organics are up 21% vs. last year, the most recent four-week period ending October 4, 2008, shows growth of only 11.2%.  Last year, organics saw 27.1% sales growth during the comparable four-week period ending October 6, 2007.

Meanwhile, in Great Britain, organics sales growth has also slowed — to just 4%, year over year, for the most recent year, ending September 6, 2008.  In comparison, during the year ending September 8, 2007, organic products saw 18% sales growth in Britain.

Organic products are clearly here to stay, but the days of boundless growth may be over.

Read coverage of Nielsen’s findings in The New York Times.