Although the financial crisis has not fully broken out in the Czech Republic, it has already its first victim – marketing. Businesses have started to scrimp and save and marketing expenditures are the first to undergo cuts. In many cases, the reduction will involve hundreds of millions of crowns.
“We have reduced the marketing budget to the largest possible extent, by approximately two-thirds. Now it is in the order of millions of crowns,” said Kamil Ziegler, vice-president for finance at ECM. ČSOB is planning the same move. According to HN information, the bank is to cut marketing expenditures by a third or even by a half, which would involve a sum exceeding CZK 100 million. “We are planning a decline. The reason behind the cost cuts is preparation for possible impacts of the financial crisis,” ČSOB spokesman Ivo Měšťánek said.
At work having nothing to do
Media, advertising and production agencies are setting the alarm bells ringing – their clients will most probably not buy as many new ads and as much advertising time as they did last year. “Firms will cut everything that does not bring them visible benefits. For example, spending on campaigns production will decrease as well because multinational companies will take samples from abroad,” said Jindřich Jirásek of the advertising agency Progres Partners.
The company Eallin, which makes commercials, has registered the first such negative signs. “Some projects we were supposed to make in January have been postponed until March. Big companies are still revising their budgets. People talk about the crisis, everyone fears it, but let’s see how it all will shape up,” said Lukáš Skalník of Eallin management.
The main topic in many companies now are the changing budgets. “Only a few clients have decided what will be their marketing budget, and many of them of course have made cuts. However, most firms do not have their budgets ready yet and rather expect marketing cuts,” said Jiří Vítek of the media agency MindShare. But there are exceptions – for example the car producer Kia wants to rely on stronger advertising at a time of crisis.
Sports hit by crisis
Cuts can be seen everywhere – for example Adidas did not extend its long-time cooperation with the Czech Olympic Committee, and the football clubs in Jablonec and Teplice count on lower sponsors’ budgets. They can perhaps find comfort in the fact that the famous Manchester United, which last year won probably everything it could win, is facing the same situation – its main sponsor, the US insurance company AIG, announced last week that it would not extend its contract. But the British media reported that Manchester has found a substitution in the Saudi Arabian telecommunication company Saudi Telecom.
Developers as well as banks
Almost all businesses want to save – the manufacturers of fast-moving consumer goods, property developers, companies in the automotive industry as well as financial institutions. And the situation is reflected in their estimated expenditures on advertising in the Czech media this year.
This was one of the reasons why the media agency OMD revised its initial forecasts at the end of last year with respect to the current situation. Until now spending on advertising grew steeply every year, while the optimistic variant of this year’s forecast is for a growth to CZK 28.73 billion (from CZK 28.71 billion in 2008) and the worst-case scenario is for a decline to CZK 28.03 billion.
That is also why the media company CME, the owner of the commercial television Nova, confirmed that advertising sales will be lower in the first quarter of this year.
