Dentsu: Ad Sales Up 3 % in 2004, 1st Newspaper Ad Increase Since 2000

Dentsu Inc.’s annual advertising spending report for 2004 says all sectors in 2004 rose 3.0 percent from 2003, hitting a total of 5.8571 trillion yen.

Ad spending in the four categories of newspapers, magazines, radio and television surged 2.6 percent. Newspapers experienced their first year-on-year gain in four years, rising 0.6 percent to 1.0559 trillion. But newspapers' share of total ad spending dipped by half a percentage point to 18.0 percent. The share of ad spending directed to the Internet soared 53.3 percent to 181.4 billion yen, surpassing that for radio (179.5 billion yen) for the first time.

A recovery in the Japanese economy helped ad revenues throughout 2004, carrying on a recovery trend started in the latter half of 2003. The Upper House election, the Athens Olympics and unusually hot weather in the summer helped to boost ad expenditures last year.

The growth prevailed till the end of September, but ad revenues fell year-on-year in the October-December quarter in part due to a slowdown in economic growth. The decline was exaggerated by the exceptionally high ad spending that accompanied the Lower House election in the fall of the preceding year.

By type of newspaper, national newspapers saw ad sales grow by 0.5 percent, but ad revenues at local newspapers dipped 0.2 percent and those at sports dailies dropped 3.5 percent. Ad revenues at English-language newspapers and other papers surged 1.4 percent.

By sector, clients in the “transportation/leisure” industries spent 9.2 percent more on ads than in 2003, while “distribution/retail” and “finance/insurance” industries spent 10.8 percent and 1.9 percent more respectively. The "food sector" and “cosmetics/toiletries” industries spent 6.6 percent and 5.8 percent more respectively. Of the 21 major industries, 10 spent more on ads. Of the four media categories, only newspapers saw an increase in ad revenues from the food (up 3.4 percent), information/communications (up 0.8 percent) and distribution/retail industries.

Back in 2003, "automobile/related equipment" industries cut ad spending by 13.3 percent, but the continuing year-on-year decline was slowed to 5.5 percent in 2004. Ad spending by "public offices and organizations" plummeted 19.2 percent, as was expected relative to the unusually high ad spending around the time of the general election a year earlier.

Dentsu Inc. on Feb. 17, said it expects nationwide ad spending to rise 1.4 percent in 2005, to 5.9379 trillion yen.

It said it sees some economic bright spots, such as better corporate earnings in a wide range of industries, an easing of financial uncertainty, an increase in equipment investments by private-sector enterprises and the opening of the Aichi World Expo. It said it expected these improvement to dampen the relative decline from the heavy ad spending related to last year's Athens Olympics. Dentsu predicts that there will be a 0.3 percent increase in ad revenues for the four categories of major media over this coming year.

Dentsu also predicts that ad revenues for newspapers will stay at least at the 2004 level and will see a modest uptrend throughout 2005, despite an anticipated economic slowdown this year. By industry, Dentsu predicts an increase in ad spending from the “information/communication” industries related to competition in the telecommunications industry; an increase from the “energy/raw materials/machinery” industries due to a liberalizing of electricity supply; from the “finance/insurance” industries due to realignment and the benefits of the end of governmental full deposit guarantees; and from the “beverage” industry, which is in the midst of beer-product wars. Dentsu also predicts that the “food” industry and the “transportation/leisure” industries will likely spend more on ads in newspapers.

Dentsu said that by type of newspaper, prospects for ad revenues in 2005 are less rosy for local and sports dailies, than for national newspapers, as has been the case for some time.

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