The media industry is counting down to festive cheer as advertisers unleash their Christmas marketing campaigns to capitalise on an upturn in retail sales.
Brand owners and retailers are unveiling their seasonal ad campaigns amid predictions that this year's media spend will be less disastrous than in 2008, when revenues for November and December dropped 15% compared to 2007. This Christmas, ad spend is expected to be down by single figures on last year's collapse.
The tactical timing of campaign launches makes a major difference to media spend. Some observers believe the principal Christmas advertisers - Boots, Marks & Spencer and the supermarket chains - will launch their festive campaigns later than last year.
But Christmas has come early for a handful of surprise clients, such as Argos, which launched its festive activity three weeks earlier than 2008 (see box, page 25). Boots was first out of the blocks last year - as it usually is - but this season it plans to launch its Christmas ads in early November, reprising the "Here come the girls" theme.
In terms of creative treatments, viewers can expect to see similar troupes of celebrities marching across their TV screens. M&S is reported to be using Stephen Fry, John Sergeant and Joanna Lumley as part of a campaign aimed at older shoppers, while Morrisons will no doubt roll out its cast of C-list celebs. And one can only ponder how Tesco will top last year's surprise hiring of ageing crooner Des O'Connor.
There has been a shift in recent years to advertisers spreading out their marketing spend in the run-up to - and aftermath of - Christmas to avoid bottlenecks in demand and the high prices created by a rush. However, much of the expected buoyancy in this year's media revenues will depend on latecomers to Christmas advertising.
The TV and press sectors have high hopes there will be a surge of late money coming into media as brand owners experience relatively strong high-street sales. If sales are better than expected, clients may well ramp up their advertising closer to Christmas.
Nick Bubb, retail analyst at Pali International, is upbeat about the prospects of this year being better than last and expects household goods to perform well. He says: "Last Christmas was saved by a last-minute rush in the final week and by people going shopping the week after Christmas. Many people take two weeks off and go shopping to escape the relatives. And this year, retailers have easy figures to beat."
A key task for media owners is luring back advertisers that have been reticent to spend heavily during the year. Rupert Howell, ITV's managing director of brand and commercial, reports things are looking up for the commercial broadcaster. ITV's October and November sales are down just 3% to 4% compared to the same period last year, and Howell predicts December "will outperform that".
He says: "Historically, money coming after the advance Christmas booking deadline has been about 7% of the total, but this year it is running at double that. Advertisers are keeping their powder dry and only releasing their marketing money when they believe consumers are willing to spend." Howell adds that costs-per-thousand for television ads are cheaper than press for the first time in history.
ITV's attempts to lure back brands that have previously run Christmas campaigns - a task spearheaded by Howell - may be having some success. Debenhams has returned to TV advertising this Christmas after its absence in 2008, launching its festive campaign in the centre-break of Coronation Street on 19 October. A spokesman says the chain is taking advantage of record low airtime prices this year, adding: "We are seeking to entice lapsed and potential new customers in the run-up to Christmas."
Some believe the collapse in advertising revenue last Christmas and during the first nine months of this year is partly attributable to a loss of confidence by the corporate world.
MPG's head of press Alan Brydon says: "Quite a lot of our clients could have afforded to spend more, but last year there was a feeling they couldn't be seen to be spending. Brands weren't exactly embarrassed, but they were aware of the outrage against the corporate world following the financial crash. If there is a sense that this year is a better environment to be seen to be advertising, then they will."
The fairy on the Christmas tree for media owners is the supermarket sector, which propped up the media market last year as Tesco and Asda poured money into marketing to fight the mother of all price wars. The price battles were played out through the red-tops and the mid-market daily newspapers, with revenues at The Sun and the Daily Mail shored up by their spend. One source expects newspaper revenues to perform worse than last Christmas, as the grocery price wars will not be quite as fierce.
Despite this, Dominic Carter, trading director at News International Commercial, comments: "Grocers will be the big drivers [of advertising growth]. Forward bookings suggest November could be up on last year, even with the demise of Woolworths."
Carter says the loss of Woolworths' substantial Christmas spend has been more than compensated for by the increased outlay by the grocers and the automotive sector, which has been running price ads related to the car scrappage scheme. He adds: "The News Group newspapers - The Sun and News of the World - have been doing well, although the quality end - The Times and The Sunday Times - is more tricky."
Steve Platt, trading director at Aegis, reports that some of the big yuletide advertisers - perfume, gifts and alcohol clients - have not been spending heavily this autumn and are down even further than the rest of the market. But he believes many of this year's ad campaigns could start a week later than last year, and adds: "Some advertisers might have been saving money throughout the year for a big push at Christmas."
There are hopes that technology brands, which are among the most important Christmas advertisers, will spend generously this year. Mobile phone companies, which have slashed their spend over the past year, may come back to the advertising fold, and there could be a surge of ads for the iPhone now O2 has lost the exclusive network rights for the brand and will have to fight it out with Orange and Vodafone in a price war. There should also be strong activity from the computer games manufacturers (see box, page 25).
Spencer Berwin, managing director of sales at JCDecaux, says many retailers will approach this Christmas with considerable anxiety. He believes clients will view the festive season as a last-ditch opportunity to stimulate sales before the uncertainties of next year kick in, with VAT set to return to 17.5% in January.
Others predict there could be an advertising slump at the beginning of 2010, as brands hold back funds in preparation for major spend at the World Cup in June. Berwin says: "It will be a difficult market next year - brands have to make hay while the Christmas sun shines. They can't mess up this Christmas or there will be big casualties."
Berwin predicts a rush of mid-December sales from retailers and one-day cut-price spectaculars, like last year. And he expects retailers to make greater use of illuminated six-sheet and billboard advertising, following Tesco's use of posters last year. He says: "In the retail sector, I expect outdoor to outperform the rest of the media market."
The upbeat message from media agencies and owners for this Christmas is tempered by uncertainty about 2010.
Nick Theakstone, chief executive of GroupM UK, sums up the mood. "It feels as though we are on a tiny bit of an upturn against previous predictions, although I'm not sure whether that can be taken as a sign of a wonderful year ahead. But there is a good feeling of positivity among media owners and agencies."
Case study: Argos invests early
CHI & Partners
Launch of campaign
The catalogue retailer has surprised the market with the early launch of this year's Christmas TV campaign, kicking off its yuletide advertising almost three weeks earlier than last year.
The activity continues the brand's money-saving strategy, using the line "Celebrate Christmas for less". The first ad to break - the 20-second "Lists" execution - launched on 18 October to promote the new Argos Christmas catalogue, which features 1,600 price cuts and 200 half-price offers.
The retailer declined to give Media Week details of its tactical price work in newspapers, citing commercial confidentiality.
But Nicola Brown, advertising manager for Argos, reveals: "Our Christmas ads humorously dramatise the reality of a British Christmas and all the quirks that make the festive season what it is."
The main TV ad - the 50-second "Together" creative -launched on 23 October, and continues the humorous take on Christmas. Argos launched its main TV campaign on 12 November last year, and Richard Wood, senior research executive at market research company YouGov, notes it is interesting the brand has run its marketing so early.
He says: "Perhaps Argos is looking for first-mover advantage, or it is thinking that people may spread the costs of Christmas by starting to buy presents early."
Steve Henderson, media planner on the Argos account at Mindshare, says the Christmas campaign is based on insight about changing consumer behaviour during the recession. He explains: "There is a move away from accumulating consumer goods towards realising the importance of other things in life, such as relationships with the family."
Mindshare's strategy is based in part on ITV research that talks about "family cuddle time" on Saturday nights. Henderson adds: "There is a trend for families watching television together, rather than the children watching one programme and the parents watching something completely different.
"Saturday night viewing figures bear this out. The Argos campaign will be weighted heavily towards Saturday nights - it will get more than its share of media."
Case study: Xbox 360's biggest Christmas campaign
Launch of campaign
Computer games will be an area of frenetic media activity this Christmas.
Microsoft's Xbox 360 has launched its biggest Christmas campaign to date, and the brand plans to take advantage of some of the cheapest TV airtime since the 1980s by cramming up to three different ads into single ad breaks. Christmas ad spend for Xbox will be greater than 2008 and 2007.
Stephen McGill, head of Xbox and entertainment at Microsoft UK, says the brand will continue promoting the console as a complete entertainment provider, with the aim of expanding its market beyond core gamers.
The campaign, which will not have an overtly Christmas theme, will promote the experiential side of the Xbox, focusing on engaging with music.
Microsoft will run a traditional promotion of its games, with particular emphasis on Forza Motorsport 3. There will also be a focus on the Xbox platform and its tie-up with the Sky Player to offer a movie streaming service.
Last year, Xbox ran three different ads in different ad breaks in programmes such as The X Factor. This year, the brand will put three executions - one promoting games, one promoting the Sky Player tie-up and one brand ad - into a single ad break.
McGill says: "Last Christmas, we had a multimedia campaign talking about the broader entertainment experiences we offer - music, games and movie downloads. We are making that even bigger this year to promote the new services we are developing."
Rory Behrman, head of planning on the Xbox account at UM, says: "We want to showcase the brand's amazing product innovation. There is too much to fit into a standard 30-second spot, so we decided to run multiple messaging. Putting all the messages in the same break helps us cut through and dominate the advertising space."
The campaign's digital work, created by AKQA, ties in strategically and artistically with the TV ads. It will give richer detail on the films available through the Zune HD Movie Marketplace, the TV and sport content available through Sky, and the opportunity to create a radio station through Last.FM. The digital element will also feature homepage takeovers and online display ads.