Press ad sector hopes for Xmas boom

LONDON - Agencies are pinning their hopes on a retail-led economic upturn in the run-up to Christmas to boost the deteriorating press ad market.

The major newspaper groups continue to wrestle with falling advertising revenues across their national and regional titles.

Last week, Trinity Mirror revealed that ad revenues at its regionals arm fell by 6% year on year in the first half of 2008, and by 6.5% at its nationals arm. Earlier, Daily Mail & General Trust (DMGT) reported that Associated Newspapers' ad revenues fell by 5% in the first half of the year.

Numis analyst Paul Richards believes that the economic downturn is particularly hitting the key print ad categories of finance, food, motors and retail, but that the press ad market is "likely to bottom out" in 2010, and then start to pick up.

He believes that across the main newspaper groups, Daily Mail and General Trust is best placed to handle a further deterioration in the press ad market, through the strength of its newspaper brands.

The broker holds a less optimistic outlook for Trinity Mirror and expects ad revenues across its regional and national divisions to further deteriorate in the second half of the year.

One key marker for the fortunes of the newspaper groups as they go forward will be how the retail category, the biggest ad category, fares in the run-up to Christmas, when retailers traditionally spend around 25% of their annual budget.

Nick Vyas, group press director at Zenith Optimedia, said: "Retail is a huge category for national press and at the moment it appears to be holding up. As consumer confidence drops there will be a question mark as to whether to cut budgets to put on the bottom line or to discount product and generate sales which may result in a more healthy level of advertising."

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