BLUE-CHIP companies’ boycott of the News of the World following the fresh revelations in the phone hacking scandal could cost News International millions of pounds in lost advertising revenue, according to analysts.
The tabloid generates about £35m in annual advertising revenue, and as much as half of this could be lost to rival Trinity Mirror in the wake of the public outcry, according to Panmure Gordon analyst Alex de Groote.
If Ford and Vauxhall – which both pulled advertising from the News of the World pending the outcome of an investigation into the allegations – maintain their blackout for a year, analysts at Enders estimate it could cost NI in the region of £14m.
However, Enders’ press analyst Douglas McCabe told City A.M.: “Advertisers who have pulled ads are not saying they will keep them out for a year; they are saying they probably won’t advertise this weekend. The hit from that is unlikely to add up to more than tens of thousands of pounds.”
His view was supported by a second City analyst, who believes the publisher will take “a tough business decision” to stem the damage. “Any loss of advertising money will be for this Sunday only – because by next week, NI will have made a tough management call to show it is serious about dealing with the issue.”
Yesterday, The Co-Operative Group, Butlins, Halifax and Virgin Holidays also said they will boycott the News of the World, while Mumsnet refused to run an ad for BSkyB, losing revenue of between £20,000 to £30,000.
Media buying agencies representing the tabloid’s advertisers supported David Cameron’s calls for an industry-wide investigation into the phone hacking allegations.
Alex Altman, CEO of Initiative, said: “Our role is to provide the clients with the facts as the situation changes and to help them through the commercial implications.”