Ad revenues seen to suffer deep cuts due to global woes

Television heavyweight GMA Network Inc. warns of a slowdown in revenues this year as the local offices of multinational firms rein in advertising spending to cope with economic woes abroad.

But GMA chairman Felipe L. Gozon is still confident that the company will attain its profit goal of about P3 billion for 2011, claiming that, for the first time in history, the network has cornered a larger share of the advertising market over rival ABS-CBN Corp.

“We’re still maintaining our target,” he told reporters late Tuesday. “We’re getting better ratings now, and not just in Metro Manila, but nationwide.”

According to Gozon, the company is now ahead of ABS-CBN in “air time” or advertising revenue, while load minutes for either networks, or the amount of time dedicated to TV commercials, “are just about even.”

Despite the growing popularity of the Internet, advertising spending in the Philippines is still mostly directed to television networks.

GMA earlier reported that profits dropped by over 37 percent in the first half of the year, reflecting the absence of political advertisements that drove earnings in the first five months of 2010.

“Our third quarter is much better than the second,” Gozon said, noting that revenue growth had recovered since July.

He noted that advertising slowed down slightly in the month of August as multinationals held back spending.

“These are the likes of Unilever, Proctor & Gamble, Johnson & Johnson and Nestlé,” Gozon said. “Their spending is affected by their parent companies overseas.”

Gozon said the economic downturn abroad, if prolonged, would have a significant toll on television network earnings.

“These multinationals are our biggest spenders,” he said. “But there has been a resurgence in spending in September. So far, our third quarter [ad revenue is] up by 20 percent from last year.”

GMA’s ad revenue took a deep cut in the third quarter of 2010 after the network’s management decided to hike its per-minute rates, prompting clients to bring their placements to rival networks.

Since the start of 2011, surveys by research firm AGB Nielsen showed GMA to be ahead in nationwide ratings, unseating the Lopez family’s ABS-CBN which, until then, appeared to be unbeatable in the wider ratings race.

GMA also continues to lead in its perennial bailiwick, the viewer-rich Metro Manila area.

AGB Nielsen’s results, however, are contradicted by rival research firm Kantar Media, which consistently reports ABS-CBN to be ahead in nationwide ratings.