Advertising is of the most common forms of communication and its ties with the economy are clear. It has long been known that advertising budgets correlate with GDP growth. In other words, when GDP grows advertising revenues increase at a similar rate, and vice versa when GDP shrinks. The impact of this particular financial crisis on advertising expenditure, and corporate communication more generally, is more complicated than just a dip in advertising expenditure. Below are five repercussions of the crisis on advertising and corporate communications in Cyprus.
1. Media space has become cheaper
One of the easiest ways organisations minimise spending costs is by decreasing their advertising expenditure. Following the crisis, as companies in Cyprus have done this, media organisations have been forced to lower what they charge for advertising either by offering more free space and time or by literally decreasing fees for exposure. Advertising prices are now so cheap it has prompted hitherto unheard-of consequences. For one, we are gradually seeing new advertisers entering media advertising space that had in the past been reserved to larger advertisers. As new players start to take advantage of cheap advertising space, content suffers because these players are only willing to spend a little on advertising space and not on production costs. Seen as a whole, traditional advertising suddenly seems less appealing to larger Cypriot advertisers.
A second consequence is an increase in non-financial and non-political journalism. Lifestyle and sports journalism are of course growing trends in all free-market, consumption–based economies, but even editors-in-chief today are well-versed in generating journalism content that is created not for the active citizen, but for the active consumer. As media space has changed, linking lifestyle and sports exposure with corporate organisations has become customary as it is seen as a revenue source for media organisations.
2. Online forms of communications are increasing
Social media managers, google ads specialists, analytics experts and digital content providers have suddenly taken on added significance. Cypriot communications professionals have begun to turn their attention toward digital communications. This trend is bound to continue as an increasing number of people spend more time on their smart phones, tablets and other digital devices. As more products go digital, from our kitchen appliances, to our cars, watches and glasses, more budgets will be invested in these areas.
3. More control from principles and regional offices
Many local distributors that work with large brands, with principles and with export managers from regional offices in Greece, Switzerland and the Emirates amongst other places, have had a lot of their influence taken away. A drop in sales has been the cause for increased tensions between these regional offices and local distributors. There is now more scrutiny, more centralised control over communication budgets, and less trust, all having consequences on the performance, strategy, target agreements and creativity of the local distributors. As distributor statuses are becoming more precarious smarter organisations are increasing their corporate communication presence either to cement their current reputation and standing or in order to take advantage of movements of brands.
4. Less reliance on advertising more on other forms of communication
Apart from an increase in digital communication, many communications professionals are moving into new areas. Integration of corporate communication, digital communication, advertising, sponsorships and other forms of public relations have all increased. Organisations have become more careful with where their budgets go, but overall, diversification has increased. Cyprus now has more sponsorship opportunities in a wide array of areas that leading brands are looking to take advantage of. Consider events such as TEDx, Legion Run, Startup Weekend and others.
5. Cash rich companies are becoming more reactive
The financial crisis has been so severe that even organisations that have money to spend are reluctant to do so. Many are waiting for the dust to settle in the Cypriot marketplace. For example, the privatisation of semi-government organisations will lead to huge changes in many sectors. Telecommunications, aviation, electricity and other large sectors will go through tremendous transitions. Many organisations that have budgets are choosing a more reactive, cautious strategy rather than attempt to take advantage. With so many changes, coupled with new interest in a Cyprus solution, this might not be a bad option.
(published with permission also in Sevodnya.com)