The current supermarket price war has done more than knock down the prices of essentials at a time when consumers have a heightened awareness of the cost of household goods. It has also helped alleviate a little of the pressure on the national press advertising market, which has suffered more than most from the tightening of marketing budgets.
Modest declines in national press spend in the first half of the year have been followed by more significant dips over the summer. Media agencies estimate that the figures for August could return a year-on-year decline of up to 10%. Without the price war, with supermarkets Asda and Tesco battling over the cost of milk and other basics, as well as the move toward full-colour printing, which has enabled publishers to charge a premium, the picture would have looked bleaker still.
To make up for the shortfall, the newspaper industry has become reliant on a much-anticipated fourth-quarter spending bonanza by advertisers in the lead-up to Christmas, particularly in the retail and entertainment sectors, which traditionally spend about 25% of their annual budgets on press advertising in this period.
Uncertain prospects
However, the newspaper industry doesn't yet know whether this fillip will materialise, and media agencies have confirmed that faltering confidence in consumers' willingness to spend is leading to reluctance among advertisers in all sectors to commit to Christmas promotions.
This, in turn, is holding agencies back from planning crucial Christmas activity. Rob Lynam, account director at Mediaedge:cia, believes that the press market will face a turbulent end of year. 'Christmas 2007 was buoyant, but this year will be different,' he says. 'People aren't spending on credit like they were 12 months ago. Consumer purchasing will be different, and that will have an impact.'
Louise Green, associate director of national press at MediaVest, adds that there will be a Christmas uplift, but that it will begin later this year, as advertisers' budgets deny them the luxury of an extended build-up. 'The average increase in spend for the latter half of the year is usually about 8%. This year I expect it will be closer to 5%.'
For their part, retailers confirm that it is too soon to outline how much of their budgets will be dedicated to national press ads over the festive period. Asda claims its Christmas campaign ideas are still at the conceptual stage, adding that, given the current economic climate, its focus is likely to remain on promoting its low prices. Other supermarkets say it is too soon to say what their press spend will be.
Heightened competition
Further pressure is coming from the outdoor sector, which is attempting to steal budget share from the national press by urging retailers to run price-promotion ads on digital screens near stores. This strategy has had some success; Sainsbury's has already run a four-day campaign highlighting an offer on wine in London - an ad that, tradition-ally, would have run in a national newspaper.
The pressure is now on national newspaper publishers to convince brands of the continuing effectiveness of advertising in the medium. The Newspaper Marketing Agency has already produced research claiming that press is at its most effective at Christmas. It argues that in groceries, alcohol, healthcare, house-hold goods and take-home confectionery, frequent newspaper readers accounted for a higher percentage of spending than the heaviest third of TV viewers in the four weeks leading up to Christmas 2007.
Katie Vanneck, sales and marketing director at Times Media, is optimistic that national newspapers' ability to deliver a mass-media message, as opposed to smaller ones now best communicated via digital media, remains compelling. 'We can deliver massive audiences, and as media becomes more fragment-ed that has become harder to do,' she says.
While the whole media industry is suffering at the hands of cautious marketers, newspapers seem particular-ly exposed. Those inside must be hoping that advertisers, especially in retail, will be feeling generous this Christmas.
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