The long, hard climb back
It will be tough for ad economy to get back into growth mode
Staff -- Broadcasting & Cable, 1/13/2002 7:00:00 PM
It's got to be better than last year. That's how the most optimistic media executives feel about the 2002 advertising market, and with good cause: They have just experienced one of the worst years on record.
In his year-end review and outlook, ad forecaster Robert Coen, of Universal McCann, called 2001 the worst year for advertising since World War II in terms of spending declines.
The key question is, when will a turnaround occur? Nobody really knows, although most are crossing their fingers for modest improvement starting in the second half. A few believe it will happen earlier, and some don't see meaningful recovery until 2003.
Ask any ad sales manager to sum up his or her feelings about 2001, and almost invariably the response is "good riddance." And let's face it: The year was terrible on so many levels. Not to trivialize the horrific events of Sept. 11, but they did contribute significantly toward making a stagnant advertising climate downright moribund.
For just about all segments of the electronic media, 2001 was a downer. In some cases, it was a double-digit downer: Local TV stations were down close to 15% (national and local spot combined) while syndication was down at least 25%.
The broadcast networks posted a sales decline—3%-4%—for the first time in a decade. For the cable networks, the decline was greater, about 7% from 2000. And radio saw a similar drop.
But the good news, says Coen, is that the economy should start to show signs of life this quarter. "By spring, the actions of the Fed [interest-rate cuts] combined with the effects of tax cuts and government stimulants to come, should result in a much more robust economic climate than we've been experiencing lately." Media executives hope he's right.
But, as Peter Mirsky wrote in a recent SG Cowen report, "the timing of a full-scale recovery remains uncertain." This year, he said, "will be a year where advertising expectations are relatively low and could improve with an upturn in the economy."
But Sanford Bernstein's Tom Wolzien says macroeconomic factors like unemployment and suppressed consumer spending, plus an overcapacity of cable inventory, will continue ad-spending declines (as percentage of gross domestic product) through the 2003-04 period. Slow expansion should follow, he says.
On the following pages, BROADCASTING & CABLE reporters take a look at the ad economy, one medium at a time.
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