Advertising decline could hurt journalism

  • 2009-03-04
  • By Nathan Greenhalgh
VILNIUS - A major pollster has predicted that Lithuanian media may see a decline in advertising of up to 30 percent this year, prompting fears that the drop could stifle journalism in the young democracy.
Media experts surveyed by TNS Gallup predict that Lithuania's advertising market will shrink by 27 percent in 2009 from last year. The market research company polled the heads of major Lithuanian media planning agencies and media organizations.

However, TNS Gallup says the number may be inflated because they expect that some of Lithuania's largest advertisers, especially mobile phone companies, will not cut their advertising budgets as much as other companies.
"Tele2 and maybe Bite and Omnitel maybe will increase their budget," Gytis Juodpusis, TNS Gallup's media director, told The Baltic Times. "There is not such a big impact from the crisis on telecommunications."
Juodpusis said he expected Lithuania's largest advertiser, the multinational consumer goods corporation Procter & Gamble, to slash its budget, as well as other top advertisers such as auto dealerships.

He based this on data from the 1998 Russian financial crisis that hammered the economies of the Baltic states. The top 10 advertisers today are mostly the same ones as a decade ago.
Juodpusis predicts that the advertising market's decrease in 2009 will have a closer correspondence to Lithuania's GDP rate, which is only predicted to decrease by 6 to 8 percent.
"Twenty-seven percent is too big," Juodpusis said. "It seems to me like some kind of panic."
Juodpusis instead expects a 10 to 15 percent decrease in advertising. He said that he expects television and print media to be the hardest hit.

"From my point of view the biggest decrease will be in TV and print media because we had absolutely the same situation 10 years ago in the Russian crisis," he said. "I think that there will be changes definitely in the magazine market. Magazines will be closed … you know Lietuvos Rytas decided to revise all their supplements and some of them are closed."

Media meltdown

Lithuanian print media underwent a wave of layoffs last year when advertising rates declined in the last few months of 2008. Since advertising was already down then, Lietuvos Rytas company director Vidmantas Strimaitis said he doesn't expect such a dramatic decrease this year.
"It's possible, but it could only be a 20 percent slump, because the November and December 2008 base is already low," Strimaitis told The Baltic Times.

But even this smaller decrease could spur more layoffs and bankruptcies. Strimaitis said the weak advertising market and new tax increase on newspapers included in the Lithuanian government's anti-crisis plan are a threat to the multimedia company's existence.
"Yes, because we have a media business only," he said.
Strimaitis said he fears that market conditions are diminishing Lithuania's capacity for quality journalism, an essential component of any democratic society.

"Yes, the quality and quantity of news will suffer 's the number of staff is decreasing, so there are less journalists' investigations. Specialized supplements are disappearing and the number of original articles is declining as well. Internet portals are getting popular, but they don't create many original articles,"  Strimaitis said.

"So if newspapers disappear, Internet sites will lose a big part of their information because Internet portals can't afford to keep as many journalists as newspapers do," he said.
The Internet is the one advertising market that the TNS Gallup poll showed would increase, with a predicted 17 percent rise.
Strimaitis is pessimistic that the microcredit the Lithuanian government will offer as part of its economic stimulus plan will help the media because dependence on government-facilitated loans could breed subservience.

"If this happens, editions will be divided into those loyal to the government and those not loyal and this would be much worse," he said.