There's nothing new about a bloody punch-up between a big
advertiser and a big media owner. Over the years the press has slavered
over stories of Unilever pulling its ads from the various ITV regions or
Mars eschewing Channel 4, for example. It's all part of the armoury of
the big advertisers' negotiating arsenal. But, inevitably, compromise is
eventually reached, wounds patched and the advertising status quo
So the news that Dixons has pulled all of its advertising out of News
International titles scores high on the interest barometer but is hardly
surprising. In fact, Dixons has something of a history of playing the
negotiating tough guy. Not only has it caused News International more
than a few headaches in the past, but it gave the Daily Mail and The
Mail on Sunday a bit of a kicking with a six-month sulk when it couldn't
reach a satisfactory deal.
The electronics stores giant, whose brands include Currys, PC World and
the Link Store as well as the Dixons chain, spends more than £80
million on advertising each year, and an estimated £20 million of
that goes into News International titles, with The Sun taking the
So in one sense this is simply yet another case of bullyboy negotiating
tactics, with one of the UK's biggest advertisers revelling in duffing
up one of the biggest and ugliest media owners. Nice to turn the tables
sometimes, although few advertisers enjoy that luxury outside of agency
But the Dixons/News International spat is also a sign of the times. The
deal has been based on circulation and RPI figures, all very standard
but perhaps not so smart in the current climate. After all, RPI might be
holding up pretty well, despite talk of a recession, but the ad market,
in press as in other media, has slumped. So press rates have been
falling and advertisers on long-term deals could find themselves paying
ahead of the market rates. It would be odd if Dixons didn't want to base
a new deal on the current advertising market conditions.
Consider, too, that there could hardly be a better time for a big
advertiser to flex its muscles. With the national newspapers looking at
vastly reduced figures for this year, they're not exactly in a strong
position to hold out against one of their major advertisers. And Dixons
has its timing pretty shrewdly sorted. The retailer's key advertising
period is the last quarter of the year, so pulling spend for a few
months across the quiet summer period as a negotiating tactic is hardly
News International won't be drawn into debate on the subject, but it
seems unlikely that this will be a long-term separation. Ads for Dixons,
Currys and so on are little more than catalogues for the companies'
wares and as such are vital tools for drawing customers into the stores
and to the cash tills.
Come the peak end-of-year season, Dixons will need to ensure a strong
presence in its key media and normal relations will probably resume.
Unless, of course, this really is a recession, and we know what many
advertisers are tempted to do in one of those.