A protest in Israel.
A protest in Israel. Photo by Nir Keidar
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Advertising spending declined by 11% in the first half of the year, with major companies targeted by last year’s social protest choosing to keep a low profile and not draw public ire. The downturn, in comparison to January-June 2011 figures, follows on from a 4.6% year-on-year decline from 2010 to 2011, according to the Ifat business information company.

The advertising scene this year was marked by uncertainty. The social justice protests that erupted last summer and focused on the cost of living − including the cost of food − dramatically curbed advertising spending in the last half of 2011. Spending remained stagnant into this year as well.

The big advertisers continued to try to stay out of the line of fire. Despite some reports of an upturn in advertising during this year’s second quarter, the situation remained bleak for the industry as a whole.

Advertising budgets remained low in sectors that have been major targets of the protest movement. The country’s largest supermarket chain, Super-Sol, slashed advertising to NIS 24.3 million during the first half of the year, 44% less than its spend in the first six months of 2011. Its major competitor, Mega, cut its advertising expenditures by 42% to NIS 17.8 million.

The Super-Pharm drugstore chain and the Club 365 group of Hamashbir department stores, which kept up their advertising pace in 2011, cut their ad spending for the first half of this year by 12% and 13% respectively.

The woes of the supermarket industry were also reflected in their recent financial results. For the first quarter, Super-Sol reported a 40% decline in its operating profits, while Alon Holdings Blue Square, which owns Mega, saw its operating profits from its supermarket business plummet 65% for the first quarter.

Dairy retailers’ advertising was off by 21% for the first half of the year. Tnuva cut its advertising spend by 34% to NIS 21.7 million. Strauss, which was still the largest advertiser for the first half of 2012, reduced its ad spending by 17% to NIS 61.5 million.

But the biggest advertising cuts came in the banking industry, which slashed spending for the first half of the year by 27%. The cellular industry, which only began facing substantial competition from new major firms in May, cut its ad spending by 22%.

“Advertisers from the food sector and retailing have cut their advertising budgets by dozens of percent so they don’t stand out and so they can divert a portion of their funds to mark-downs and promotions,” said Nati Yaakobi, who heads Ifat’s advertising monitoring division. “We are seeing an increase in the number of sales campaigns as opposed to image-building campaigns, and the number of campaigns that are on for a few days or that are targeted in their nature have also increased.”

Ifat’s data shows that although the social justice protests affected some industries, it almost completely bypassed others. Advertising by the insurance industry grew 33% in the first half of the year, and the retail clothing sector experienced a 21% increase, mainly due to major ad volume expansion on the part of clothing retail chains Jump, Matim Li and Fox.

There was also an ad increase in the appliance sector, although at a more modest 3%, largely because of the increase in the sales of large-screen televisions prior to Euro 2012 last month.