WORLDWIDE ADVERTISING: Germany's ad market - sober but not spent. The German ad industry enjoyed the dotcom fun while it lasted, but itdoesn't share the fears of recession on either side of the Atlantic...

As with many markets around the world, Germany has seen a

dotcom-fuelled explosion in advertising spend come to an abrupt end.

Whereas 1999 and 2000 were exceptional years, with the latter 16 per

cent up on the former in terms of media spend, 2001 began in a more

restrained fashion.



Perhaps we should substitute the word "sober" for restrained, given that

beer advertising spend in the first quarter was down almost 17 per cent

on the first quarter of last year. But if beer is worse than flat it is

as nothing to the collapse of the telecoms/internet category, where

spend is reckoned to be 41 per cent down in comparison with the first

three months of 2000.



Overall, though, the picture is not quite as bad. ACNielsen figures

point to gross first quarter media spend of DM8.1 billion, down a not

too drastic 3.7 per cent on a year ago. The TV, magazine and newspaper

categories all experienced a decline, with radio holding steady and

outdoor bucking the trend with a 10.2 per cent rise.



Outdoor's positive performance arguably illustrates the problems facing

the German marketplace. With media costs having risen by about 50 per

cent over the past five years at a time of increasing media

proliferation, there has been growing concern among clients about

advertising cost inflation.



This has been exacerbated by genuine concerns as to the effectiveness of

advertising in an ever more fragmented media environment.



"The challenge for everyone at the moment is to show the effectiveness

of media," MediaCom Germany's chief operating officer, Jorgen

Blomenkamp, says. "It's a difficult time for new launches in old media.

The marketplace is already so fragmented that the last thing we need is

new magazine titles and new TV stations. Maybe in the long run outdoor

will emerge as a big winner."



MindShare Germany's managing director, Paul Vogler, recalls that last

year there were no good quality prime time TV slots to be had in the

spring, as they had all been snapped up long in advance. This year

availability has been far better.



Vogler thinks it is tough to predict exactly what will happen in the

advertising marketplace in the coming months, especially given the

widespread talk of economic slowdown. He expects the year to yield a

slight increase in advertising expenditure.



OMD International's associate media director Oliver Stroh says he has

noticed German TV stations becoming more cost-conscious, cutting back

their investment in new programming. This has implications for

advertisers, for if there is a dearth of quality new shows it is sure to

have a negative impact on the viewing audience.



TV is definitely having a tougher time of things than in the recent

past, yet it still accounts for the lion's share of advertising media

spend in Germany. Last year, ACNielsen says TV advertising was worth

DM15.6 billion out of a total advertising media spend of DM35.5

billion.



OMD, Carat and MediaCom are the three big media agency players in the

country, between them accounting for around 40 per cent of media

billings and nearly half of TV spend. Bertelsmann-controlled RTL, and

Sat1 and ProSieben - both owned by the Kirch family - are the leading

commercial TV stations. Limited amounts of commercial airtime are also

available on state-owned channels ARD and ZDF.



In the consumer magazines sector, Burda-owned Focus led the way in

advertising revenue in quarter one this year, according to ACNielsen,

with spend of DM110 million. Spiegel and Stern occupied second and third

spots on the rankings.



Less successful for Burda was the launch of weekly title Vivian late

last year. The magazine was axed just three months after its debut when

its circulation slumped to around 130,000, well short of the targeted

level of 250,000 copies. Clearly, the cluttered marketplace is making it

harder than ever to establish fresh media brands and media owners are

acting swiftly and decisively if product fails to catch fire with its

intended audience.



Amid such market conditions many observers were surprised that

Verlagsgruppe Handelsblatt pressed ahead with the launch of its

Wirtschaftswoche e-business title in the middle of March. Given the

problems experienced by many new economy businesses, it seemed a curious

time to be launching a media product aimed squarely at this audience.

Certainly it will be intriguing to see how it fares in the coming

months.



Bertelsmann-owned publisher Gruner & Jahr says it has no launches in the

pipeline and is keeping a weather eye on market conditions. However, a

spokesman says the company is fairly optimistic that ad spend will rise

again in a few months.



G&J's last major launch was Living at Home, which first hit the

newsstands last November. This monthly home interest title has a

companion website and there are plans to create a TV show around the

brand later this year.



Conde Nast, meanwhile, has taken its US product Glamour into the German

market this year. Just as with the simultaneous UK launch, the magazine

stands out by being handbag-sized. Bauer, with weekly magazine Vida, and

Burda (again) with fitness title Wellfit are among the big players to

chance their arm with new offerings.



The fitness magazine market is already very competitive, but if there is

anything the Germans enjoy far more avidly than sweating off pounds on

the treadmill it is pushing their vehicles to maximum speed on the

Autobahn.



It is revealing to note that eight of the top 20 advertisers in the

first quarter of 2001 were from the automotive sector.



Opel was the biggest spender among the car companies, ahead of

Volkswagen, Ford, Renault, Peugeot, Fiat, DaimlerChrysler and Audi.

However, Opel were only in fourth spot overall, behind Ferrero, Procter

& Gamble and Media-Markt. Global mega-brands McDonald's and Coca-Cola

featured in 14th and 19th position respectively.



"More light!" that German literary great Johann Wolfgang von Goethe was

meant to have called out as his dying words in 1832. There are many in

the German media marketplace today who also fervently wish for greater

illumination, so as to reveal whether there will be a return to healthy

growth or not in media spending over coming months.



GROSS ADVERTISING SPEND PER MEDIA GROUP

Medium Gross advertising (DM millions) Change Change

spend absolute %

9/1/00 9/1/99

Newspapers 5,759 5174 585 11.3

Magazines 5,729 5006 663 13.1

Trade press 685 656 29 4.5

TV Total 10,749 9340 1408 15.1

commercial 10,041 8702 1339 15.4

public 708 639 69 10.9

Radio 1,503 1326 177 13.4

Posters 679 641 38 6.0

Total 25,103 22202 2901 13.1

Source:AC Nielsen Werbeforschung. Based on 1-3 quarter 2000 vs 1999.





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