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Advertising Agencies Reported Growth; Television Revolution Continued; Execs Upbeat About 2004
Second Half Of 2003 Saw Marked Improvement In Ad Industry
By ROSSIE CORTES
December 25, 2003
At the beginning of 2003, many executives within the advertising industry hesitated to make optimistic projections of what the year would bring. However, improvements in the latter half of the year had them singing a different tune about 2004.
Based on 2002 results and the uncertain status of the islands economy, many agencies concentrated their efforts on improving and cultivating their internal resources, enhancing their employee relations as well as their client relations.
The slow growth of advertising budgets for the first six months of the year created a sense of insecurity in many agencies, which began to speculate about the months ahead. However, the recovery in advertising investment for the last half of the year took some executives by surprise.
"There was uncertainty about what 2003 was going to bring; even the most optimistic managers may have been a bit conservative about what to expect," said Carlos Carbonell, executive vice president & managing director of Young & Rubicam Puerto Rico Inc. and president of the Association of Advertising Agencies of Puerto Rico (AAPPR by its Spanish acronym). "Now, we have the right to expect a good year in 2004. Of course, typically, an election year has a positive effect on the industry even for those who dont have candidates as clients," he said.
Similarly, John Raevis, president of De La Cruz Group, said, "2002 was one of the worst years I have seen in the industry, but now things are looking up. We are well-positioned for 2004, and we believe the next two years will be good as long as our clients have an optimistic view of their future."
Despite earlier predictions that 2003 would be a year of slow and uncertain recovery, the sales numbers for the industry testify to an apparent recovery in the economy. Carbonell said, "Although it was not an easy year, it ended better than what many people within the industry expected." Some agencies, such as Wing Latino, told CARIBBEAN BUSINESS they saw growth of 5% in 2003 and forecast an additional 5% for 2004. Others, such as De La Cruz, reported double-digit growth in 2003 and high expectations for next year.
Internal analysis by Wing Latino estimates 3% growth in investment for television ads, in contrast to MediaFaxs report of 2% below last year. Hector Ortiz, president of Wing Latino Group, said, "You have to consider the reduction in the amount of time dedicated to ads on television, which resulted in higher rates but greater investment."
Because of the changes that started at Univision last year, some other television stations reduced the time available for ads and increased their rates to compensate for the change. As a result, the market has seen a proliferation of new, alternative media that are responding to the demand for innovative ways to advertise. Ortiz said, "Advertisers that cannot pay the new rates are not moving their efforts to alternative or tactical media. Therefore, we can safely expect usage of this medium to increase in the coming years."
In the government sector, the year started with several controversies that resulted in Gov. Sila Calderons signature on the Clean Money Law for the management of funds for the 2004 elections. The law will provide more money for the candidates advertising campaigns, which will inject funds into the agencies involved.
In other areas, new opportunities for growth appeared across market segments with the creation of new product categories throughout 2003. New products were developed to capture the attention of consumers, with companies creating products geared to specific tastes.
In the U.S., the search for market growth led to a shift in focus toward seeking out new consumer segments. Such segmentation of target consumers is not evident only in advertising placements, but also in new marketing strategies aimed at the growing Hispanic market in the U.S. Additionally, international agencies began efforts to lure personnel from agencies in Puerto Rico.
This Caribbean Business article appears courtesy of Casiano Communications.