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Will Spain's Ad Market See Growth This Year?

Prospects for ad spending are looking up as the economy appears to be turning a corner

May 6, 2014 | Media Buying

Spain has suffered more than most Western European countries from the 2008 economic crisis and its debilitating long-term effects. Unemployment in the country climbed to 25.9% in Q1 2014, according to the Instituto Nacional de Estadística. Among younger adults, a shocking 53.6% were out of work in February 2014, according to Trading Economics and Eurostat.

Ad Spending in Spain, by Media, Q1 2013 & Q1 2014 (millions of € and % change)

But there’s good news, too: Q1 2014 saw Spain’s economy expand at the fastest pace in six years (0.4%), the Banco de España revealed in its preliminary estimates for the period.

The advertising landscape is also improving, judging by Q1 figures from two of the country’s most respected sources of market data. Their projections don’t agree precisely, but both firms foresee much better performance this year than in 2013.

Ad Spending in Spain, by Media, 2014 (millions of €, % change vs. prior year and % of total)

Arce Media found that ad spending on conventional media—including internet display ads, as well as traditional media channels such as print, TV, radio, outdoor and cinema—fell 1.3% year over year in Q1 2014, to €832.5 million ($1.11 billion). But this decline was far smaller than the drop seen in Q1 2013, when investments were down 16.8% year over year. Moreover, Arce Media predicted full-year ad spending of €3.63 billion ($4.84 billion) on conventional media—a 1.7% annual gain—and estimated that most media would post increased spending; TV and the internet were also projected to grow their shares of the total.

InfoAdex estimated that expenditure on conventional media in Spain reached €829.0 million ($1.11 billion) in Q1 2014, compared with €827.4 million ($1.10 billion) in Q1 2013—a rise of 0.2%. This calculation included spending on display ads appearing on the “fixed internet” (desktop) only, as well as investment in older platforms.

Ad Spending in Spain, by Media, Q1 2013 & Q1 2014 (millions of € and % change)

Most categories registered declines, according to the quarterly report. But a 3.1% rise in television ad spending—the largest single component—carried the total into the black. Online ad spending also grew by 3.1%, and investments in cinema ads jumped by an estimated 31.4%, InfoAdex reported.

These encouraging signs align with eMarketer’s view of the year ahead. According to our estimates, expenditure on all measured media in Spain will register growth of 1.5%. This will compare favorably with annual increases in many other countries in Western Europe and represents a welcome change from the past two years, when the Spanish market posted losses of 11.0% and 8.0%, respectively.

That said, not all advertisers are optimistic about ad spending in Spain. Among those professionals on ZenithOptimedia’s Zenthinela panel, the promising start to the year hadn’t overcome some lingering worries.

Overall, the responses of panelists suggested that ad spending on all measured media could fall by 3.5% in 2014. Higher expenditure on below-the-line marketing—such as sponsorships, branded content, telemarketing and promotions—could mitigate this decline, though, producing a drop of just 1.6%. Total media spending should also get a major boost from the FIFA World Cup held in Brazil in Q2 2014.

It’s no surprise that hard-pressed advertisers take early signs of market improvement with a pinch of salt. But the Zenthinela panel does seem unduly downbeat—predicting, for example, that cinema ad spending would slide by 5.6% in 2014. This is clearly at odds with strong results in Q1 2014: Both Arce Media and InfoAdex calculated gains of around 30% in this category.

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