Spain's TV Slump Indicative of Tough Economy

The weakening advertising economy in Spain is the direct result of an economy struggling with recession and also reflects shifts in consumption patterns involving new media.

Disclaimer:  I do not live in Spain, but have visited the country many times (as recent as 2008) and am engaged in research across the Spanish-speaking world.

Spain's economy has suffered terribly with the global recession.  Unemployment has been as high as 20%.  Along with problems in the credit markets and other woes in the financial sector, the situation in Spain is not unlike the US in terms of reactions:  consumers stop spending, firms cut payroll and costs (advertising one of the first), and the economy slows further.

In most of the past decade (2000-2007) from which recent data is available) Spain's advertising as a percentage of GDP has averaged around .78, according to data from the World Bank and the publication World Advertising Trends.  Overall, Spain has seen advertising in newspapers, radio and magazines decline rapidly the past few years; television was increasing up until the economic crisis hit.

The question is how much will Spain's TV ad market rebound as the recession eases.  The projections in this article suggest a double-digit increase, but even with that, the expectation is that TV ad revenues have already peaked (probably In 2006) and will begin a secular decline, due primarily to the fragmentation of the audience and the shift to online and new media.

Spain is blessed like the US with numerous media options for consumers, and the country is experiencing a broader macro-shift of advertising dollars flowing from traditional to digital media.

Yet another factor in the cluttered TV ad market in Spain was the decision of the government to allow national TV stations to be privatized in terms of seeking advertising.  This added to a glut of channels chasing the same clients.  

Alan Albarran consults with leading institutions through GLG