Carat warns of ‘extreme’ switch in ad spending from TV to digital

Core television advertisers such as motor, retail and finance brands are increasingly taking money from traditional media and ploughing it online, according to media agency Carat.

The agency is warning against a “wholesale” change in emphasis from television to online in key categories, following the publication of its annual Biggest Markets Review.

Carat head of media Steve Hobbs questions the stability of such a rapid change. He says: “I wonder if in the long run we will regret the wholesale change of emphasis [to new digital media].”

The report says advertising expenditure in the UK grew 5.5% in 2005, aided by “significantly” higher-than-predicted internet spending.

This year started disappointingly with a year-on-year decline in revenue across TV markets and the World Cup not providing as strong a boost as had been anticipated.

“How established markets adapt to and harness new media will be an important market issue over the coming years as key categories, particularly motor, retail and finance, switch their spending,” the report warns.

Hobbs adds: “We may be all moving our budgets too quickly from one medium to another. Nobody can put their finger on why this is happening – the fall [in TV ad revenue] is more extreme than some people predicted.”

Carat managing director Neil Jones agrees advertisers are moving their money online and below-the-line, and adds that the expected further decline in retail, motor and finance brands will be driven by lower sales.

“Very simply, sales are suffering in the retail market, bar star performers such as Debenhams – a Carat client – Matalan or Marks & Spencer,” says Jones.

“The very tough car market is also being driven by demand from consumers. Gone are the good old days where the advertising economy followed the country economy, not least because of the growth of procurement processes by clients.”

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