Call it the March tornado. The first, unofficial advertising returns for the month are in for newspapers and magazines, and the news is generally becoming worse, not better. Declines, particularly in recruitment advertising, are so sudden, so steep and so pervasive that pessimists suspect this advertising vortex may rival the bad days of the early 1990's.
What has surprised advertising salesmen and advertising buyers is not so much that the boom of a year ago sputtered out, but the speed at which the latest downturn is sucking advertising away.
The stomach-churning quality of the drop-off, analysts, advertising buyers and media executives say, reminds them of the early 1990's and the worst advertising recession since World War II. But the optimists among them say that in a period of compressed economic cycles, good times may return as fast as they left.
The early months of 2000 were the heights of the good times, and the advertising market was at its peak. These boom times made print media - particularly newspapers - increasingly dependent on the very types of revenue that have vanished most quickly. As spending swelled to epic proportions, so did newspapers' dependency on recruitment and national advertising.
Workers were needed; help-wanted classifieds expanded - even though some of them leached to the Internet. New-economy Internet companies competed to get the public's attention and old-economy brokerage firms competed to invest the public's 401(k) assets.
Now there is less demand for workers, and help-wanted sections in markets like San Jose, Calif., and Boston have shrunk a quarter to a third or more compared with last year. When it comes to national brand advertising, newspapers are often the first medium to be cut. Why? Newspaper readers tend to be older and thus less coveted by advertisers. Newspapers tend to be more expensive than other media per reader or viewer. And most important, it is much easier to pull newspaper ads at the last minute.
Ernie Simon, a group planning director at the advertising agency MindShare, explained: ``What you're finding with a lot of clients is that they cut what they can cut quickly. A lot of media have long lead times. So things like spot television advertising and newspapers tend to get cut at the last minute.''
With sales falling, he said, companies hoping to make their budgets and give Wall Street the margins they promised decide that ``getting money back is their first concern.''
The optimists, where they exist, are hard put to find many silver linings, though they do stress that, at least for newspapers, real estate advertising is showing an upward trend and automotive advertising is holding its own in some markets. Also, they say that 2001 should be compared with 1999 or 1998, not the good times of early 2000. Looking forward, they argue that the forces that accelerated the decline could accelerate a recovery.
Right now, signs of weakness are everywhere. Last week the Tribune Company, publisher of The Chicago Tribune and The Los Angeles Times, reported that in February its overall classified revenue was down 12 percent from February 2000. At The Los Angeles Times, the volume of advertising that reached all readers - called full-run advertising - was down 11 percent in February.
At The New York Times, total volume was down 6.9 percent in February, compared with February 2000 - the steepest monthly percentage decline since the advertising economy turned sour last fall. At The Minneapolis Star-Tribune, the largest of the McClatchy Company's newspapers, advertising revenue was down 8.2 percent in February.
At The Wall Street Journal, a Dow Jones & Company publication, advertising volume, which rose steeply in early 2000, has dropped off almost as fast. In February 2000, ad volume was 49.5 percent greater than it had been in February 1999. Last month, it was off 35.5 percent.
In magazines, optimism is hard to find. Bill Holiber, the publisher of U.S. News & World Report, said, ``In the 20 years I have been doing this, I have never seen such a sudden change down.''
``Public companies have made promises to their shareholders,'' he said. ``They have to deliver on those promises. So you're seeing massive cutbacks that we began to see evidence of in the middle of August. There was a kind of denial going on and and then the fourth quarter just shocked everybody. And then instead of getting better, it got even worse this year.''
Total magazine advertising pages for February were down 9.7 percent from last year, according to the Publishers Information Bureau.
The weekly newsmagazines have taken a particularly hard hit. U.S. News & World Report ran 26 ad pages in its March 19 issue - a drop of 48 percent from the 51 pages it ran on March 20, 2000, according to a tally by the trade publication Mediaweek. So far this year, U.S. News ad pages are down 15 percent; Time magazine, 11 percent; and Newsweek, a Washington Post Company magazine, 26 percent, according to Mediaweek. The weekly news magazines as a category are carrying 35 percent less advertising than they did last year.
Magazine industry executives say that advertisers, in need of cash, are not buying packages for the year, as they do in good years, or even for a few months, as they did last year. They buy month by month, if at all.
``I call it the caveman mentality,'' said William P. Kupper Jr., publisher of Business Week, a McGraw-Hill publication. ``They stick their head out of the cave and then, whoops, the market goes down again, and they pop their head back in the cave.
Mr. Holiber of U.S. News agreed that advertisers were skittish. ``Last week we thought we had lured back in a bunch of advertisers who we thought had bottomed out as far as they would go, but now they're coming back and cutting back their advertising completely,'' he said.
Advertising buyers have their own frustrations. A year ago, ad salespeople from some publications would not return their calls. Now, said Jean Pool, president for operations at MindShare, a unit of WPP, it is her clients who do not call. One way to get them back, she said, is to push for lower advertising rates.
"In a bad economy," she said, "it is our responsibility to drive rates down as low as possible.'' The idea is to have the lowest possible base when the rates start back up.
When rates drop in one medium, like television, advertisers who are still in the game can channel the savings into other media. Thomas Curley, the publisher of the Gannettcoei Company's USA Today, said he was seeing this. ``TV prices are collapsing,'' he said, which means ``there are some pockets of opportunity for us as TV money shifts.'' He credited this process for bringing his newspaper four large advertising buys the last month.
Advertisers in some categories never left. Jyll F. Holzman, the senior vice president for advertising at The New York Times, said that fashion and banking were up more than 20 percent this year. Gannett's chief executive, Douglas H. McCorkindale, told analysts last week that real estate, telecommunications and grocery advertising were bright spots for the company's newspapers.
Jack Fuller, president of Tribune Publishing, the newspaper division of the Tribune Company, is reluctant to compare the current downturn with 1990 and 1991. He said: ``When it's going up they forget that it can go down. When it is going down they're afraid it's never going to come back up.'' But this time around, he said, "things happen faster."
FELICITY BARRINGER and ALEX KUCZYNSKI, The New York Times. March 26, 2001
Copyright © 2001 The New York Times Company. All rights reserved.