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Few Signs of a Bottom in the Media Economy

The first half of 2001 is drawing to a close with few if any signs that the weakening of the advertising and media economies will reverse itself anytime soon.

The continuing softness was underlined yesterday when the Publishers Information Bureau in New York reported that ad revenue and ad pages for leading magazines fell noticeably in May compared with May 2000. The results for May contrasted with those for April, which had been somewhat better than expected given the cutbacks many marketers have been making in print ad budgets.

"We're damn near in the second half now, and there are not many months left for good news to come out," said Robert J. Coen, senior vice president and forecasting director at Universal McCann in New York.

Mr. Coen, considered the leading industry prognosticator, said that he planned to reduce for a second time his estimate for this year's total ad spending when he gives a presentation scheduled for Thursday. His first forecast for 2001, made in June 2000, was that ad spending would increase 6.5 percent from 2000. He reduced that estimate six months later to an increase of 5.8 percent after witnessing the decline in ad spending in traditional media by the dot-coms.

Now, with substantially further erosion in that spending, Mr. Coen said, he would lower his forecast again. Even if results began to improve in November or December because of easier comparisons to ad spending in 2000, he added, "it would not be good enough to pull this year out." Universal McCann is the media services division of McCann-Erickson Worldwide Advertising, part of the McCann-Erickson World Group unit of the Interpublic Group of Companies.

"Wall Street's perspective is that this is a lost year," said Michael J. Russell Jr., an analyst at Morgan Stanley in New York who follows the advertising industry. "The less said about it, the better."

"Last year, a rising tide lifted all the boats," he added, referring to the strong spending by the dot-coms along with Olympics and election advertising. "Now, a falling tide is bringing all the boats aground."

One such boat, clearly, is magazines, where the declines in ad spending and ad pages last month were most evident in several large, important categories.

Among them were: financial, insurance and real estate, down 21.5 percent in ad revenue and 32.7 percent in ad pages; media and advertising, down 24.9 percent in ad revenue and 36.7 percent in ad pages; retail, down 38.4 percent in ad revenue and 32.1 percent in ad pages; and technology, down 45 percent in ad revenue and 52.7 percent in ad pages.

"That's a lot of `downs,' " said Joe Mandese, who left Myers Reports in New York, where he was editor of The Myers Report, a media newsletter, to become editor of Media Buyer's Daily, a newsletter to be published by Brill Media Holdings in New York.

Weak ad spending by retailers has been crimping other media, Mr. Mandese said, like spot, or local, radio and television.

"Media go and in out of recessions at different rates," he added. "Now, you don't want to be retail-sensitive."

Another print medium, newspapers, is also suffering as a result of the belt-tightening by retail advertisers as well as other major spenders. For instance, Dow Jones & Company reported last week that ad linage at its flagship, The Wall Street Journal, fell 35.8 percent in May compared with May 2000, led by the financial category, down 36.1 percent, and general advertising, down 39.7 percent.

For magazines last month, according to the publishers' bureau, ad revenue totaled $1.5 billion, down 9.4 percent from $1.7 billion in May 2000, as ad pages fell 16.9 percent, to 22,368 from 26,928. Last month, the bureau reported that ad revenue in April fell 1.2 percent from April 2000 as ad pages fell 9.5 percent.

For the first five months of 2001, ad revenue totaled $6.7 billion, down 1.9 percent from the period a year earlier, the bureau reported, as ad pages totaled 101,990, down 9.4 percent.

"Like everybody else, we've seen a softer economy," said Ellen Oppenheim, executive vice president and chief marketing officer at the Magazine Publishers of America, the industry organization that administers the bureau.

"And while we don't predict," she added, "the messages we're hearing regarding spending in other media suggest the softness will continue."

A primary reason for the weakness, Ms. Oppenheim said, was the difficulty in making comparisons against the robust spending levels during most of 2000, which was "an unusual year in its strength," as she put it.

Another reason for the softness, Ms. Oppenheim said, was that "many advertisers are playing a waiting game," searching for signs that consumers are willing to resume spending before they commit scarce ad dollars.

That is also why the advance sale of commercial time for the 2001-02 season by the broadcast television networks, in what is known as the upfront market, is getting off to such a slow start.

"That's why the `upfront' is so important," Mr. Russell said, "because it's a reflection in part on what 2002 will bring."

"If you don't have a value proposition," he added, referring to the ability of executives to present their media as sufficiently effective and efficient for marketers, "it may be difficult to come out of the current market with some vigor."


Stuart Elliott, The New York Times. June 12, 2001

Copyright © 2001 The New York Times Company. All rights reserved.