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Spain faces double dip advertising plunge

Consumer confidence blamed for drop

Spain looks set for the TV ad man’s worst nightmare — a double-dip downturn — as a first-half advertising revenue rally runs out of steam.

Estimates of how bad or long Spain’s second dip will be vary. Common consensus, however, suggests it will reach rock bottom this month.

Analysts forecast that TV channels will see a year-on-year 7% TV ad revs plunge in October, after a 1%-4% drop in September.

Zenith Media predicts a 10% fall in total advertising in Spain this month, after a 7%-8% drop in September.

TV ad spending faces far tougher comparisons with the same period last year when a faltering recovery began to kick in.

In the first quarter of 2010, a governmental cash-for-clunkers scheme boosted car sales 39.5% year-on-year, allowing Telecinco to push through 30% year-on-year price hikes on ads for cars and other goods in the second quarter.

But the scheme finished at the end of June, and in July the local value-added tax on goods rose from 16% to 18%.

September car sales were just 56,600 units, the worst result in 20 years, which had a ripple effect on advertising.

TV channels can take heart, however, from two factors.

First, Spain’s dominant TV channels — pubcaster TVE-1 (a 15.3 September market share), Telecinco (12.3) and Antena 3 (11.3) — have been hit by market fragmentation. Their combined core channel market share of 39.8% in September is the lowest ever.

But bundled with their burgeoning niche digital terrestrial TV services, the trio’s combined share is 57.9%, the same as its average for 2006, when fragmentation began to take off.

Second, Spain’s biggest commercial nets, Telecinco and Antena 3, have been the beneficiaries of a government-imposed ad ban at pubcaster TVE that began this year, freeing up about €700 million ($973 million) in TV advertising.

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