MediaFile

How bad is advertising? Think 1950s

November 11, 2008

Everyone seems to have accepted (like it or not) that advertising spending will be in bad shape in the fourth quarter and well into next year. But just how bad is a matter of debate — every new piece of research marks another downward revision to the advertising outlook.

Case in point is Citi’s Catriona Fallon, who issued a new report saying that U.S. advertising spending would drop by 1.8 percent in 2008 and 3.6 percent in 2009. So what? Well, consider this: that would mark the first back-to-back annual declines since at the 1950s. The 1950s! We’re talking The Cold War, Fats Domino, Gidget, Cadillac Eldorado — you get the picture.

Here’s a bit from Fallon’s research report, where she discussed the thought behind cutting the 2008 outlook from growth of 0.2 percent to a decline of 1.8 percent :

Essentially, we made a dramatic reduction in our Internet advertising growth expectations and also see steeper declines in local ad-focused media categories, including newspapers, radio, and yellow pages. Internet advertising had been one of the few shining lights coming into 2008, but overall economic softness has lowered 2009 expected growth rates in this medium to the single digits. Meanwhile, Q3 results for publicly-traded newspaper, magazine and yellow pages companies, and CIR forecasts for the radio industry show that the ad revenue declines in these businesses have
sharpened over the course of the year.

Anyone seen my Elvis Presley albums?

Keep an eye on:

  • More bad new for Sirius XM Radio — as if trading at 27 cents a share isn’t bad enough. The company posted a $4.8 billion write-down and made some more ominous comments about the auto industry (Reuters)
  • A nine-car NASCAR pileup may have wrecked a vehicle sponsored by the Federal Communications Commission, but it gave the agency more mileage in advertising the imminent switch to digital TV signals (Reuters)
  • Blu-ray backers are banking on falling prices, summer blockbusters and an ad blitz to get consumers to make the leap to high-definition (NY Post)
  • Time Inc has asked for volunteers to get bought out from People, Time, Sports Illustrated, Fortune and Money, as it goes into job cutting mode (AdAge.com)

(Photo: Reuters)

Comments
2 comments so far | RSS Comments RSS

It all depends on what you mean by “bad”. The smaller a company’s advertising budget is, the less upwards pressure it will exert on the prices of that company’s goods in the shops. The customers aren’t having to shell out extra money in order to be annoyed by adverts they don’t want.

Posted by Ian Kemmish | Report as abusive
 

I think we are seeing the market adjusting to a number of pressures. Yes advertiser’s are feeling the pinch at the moment and having to deal with budget cuts…

But, perhaps this will lead to more targeted advertising, less clutter, more innovative campaigns on shoestring budgets?

The current bright light seams to be Google Adwords, perhaps the advertising industry can learn something from that model.

 

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