Companies controlled by Mexican entrepreneur Carlos Slim will no longer place advertising this year in various media owned by Grupo Televisa, corporate communications sources at Televisa revealed this week.
The advertising expenditures of companies owned by Mexican businessman Carlos Slim, such as Telmex, Telcel, Sanborns and Sears, would have represented about 3.8% of Televisa’s Television Abierta division revenues, and close to 1.8% of the company’s total sales.
What are the implications for the Mexican advertising market?
Grupo Carso is known for offering the best advertising rates for media buys in the Mexican advertising market. It wields enormous buying power and uses it very efficiently.
In Mexico, the advertising price index and media rates, as well as the total budget for ad spending, is seriously influenced each year by what Grupo Televisa decides to do. Major advertisers base their budget decisions and resources according to the outcome of Tlevisa's negotiations, which clearly have a domino effect on negotiations for print, radio and digital ad buys.
In 2011, there has been an apparent fall in TV advertising rates,in real terms, as Grupo Televisa has informed Carso. However, ad rates for magazines and other media are in need of a major update, in light of accumulated inflation over the last two years of more than 8.5%. However, with the exception of advertising for political campaigns in some states, particularly the state of Mexico, and some specific tournaments like the Gold Cup (USA) and the Americas Cup (Argentina), in which the Mexican national team has little chance of winning, there are no major events where a large outlay in advertising can be expected.
This means that Grupo Televisa (TV, Pay TV and magazines) will have to be extremely aggressive to attract more advertisers and recoup the ad spending lost from Grupo Carso. In other words, in order to recover the advertising revenue it traditionally bills to Slim's companies, Televisa is likely to lower its rates to attract other advertisers. This scenario is therefore creating a favorable market for advertisers who may benefit from lower prices.
The implication for Televisa’s media competitors is that they now have the opportunity to get more of Grupo Carso’s ad space and time, but will they will have to be more competitive against Grupo Carso’s competitors which Televisa is now offering very competitive rates. The Mexican ad market will undoubtedly heat up during March 2011.
This is just one more chapter in Mexico’s history of media transformation and changes in its telecommunications, content and corporate group makeup. In a country of more than 112 million inhabitants, public television has an 80% penetration in homes and competes with mobile phone operations, both service contract and prepaid. Mobile penetration in the country stands at over 60%. This situation pits two leading groups that are betting on a triple-play or quadruple-play strategy: TV, Internet, fixed and mobile telephony.
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