The deterioration of the outlook for the national economy after the terrorist attacks is leading advertising industry analysts to reassess their estimates for ad spending this year and next. In almost every instance, they are predicting no growth, or steeper cutbacks, for 2001 and 2002.
At the same time, advertisers and agencies are reassessing marketing plans as they continue to change, postpone or cancel campaigns.
"We are entering new and uncharted territory," said Leland Westerfield, an analyst at UBS Warburg in New York. He revised his estimate for this year to a 5 percent decline in spending from 2000, compared with a 4 percent decline he had estimated previously.
For 2002, Mr. Westerfield said, he now predicts a 2 percent decline from 2001, compared with his previous estimate of flat spending.
"Advertising has never declined two years in a row," he added, but the "high likelihood" of canceled commitments for network television commercial time by marketers in categories like travel, financial and automotive makes that possible.
The worsening outlook for ad spending was the reason given on Friday by Havas Advertising in Paris for abandoning a $620 million takeover bid for the Tempus Group in London.
Kevin Sullivan, an analyst at Lehman Brothers in New York, gave two reasons for estimating that ad spending this year could decline by 3.3 percent to 3.5 percent from 2000 rather than by 2.3 percent as he previously forecast.
One reason was the inability of advertisers to spend $750 million to $1.25 billion in the days immediately after the assaults as media outlets undertook continuous news coverage and the broadcast TV networks postponed the start of the 2001-2002 season until today. The other reason Mr. Sullivan gave was the possibility of cutbacks in ad spending by travel, tourism and entertainment marketers.
For now, Mr. Sullivan said, he would maintain his estimate that ad spending next year is to increase 2.5 percent from 2001, but would continue to monitor consumer and business confidence levels as well as the ability of economic growth to resume.
Jack Myers, chief economist for Myers Reports in New York, which publishes media and research newsletters, was more pessimistic.
"Based on the president's speech," Mr. Myers said, referring to President Bush's address to Congress Thursday night, "it looks like things are going to get worse before they get better."
As a result, he added, he had formally adopted a "worst case scenario" he proposed last month that ad spending in 2001 would decline by 6.6 percent from 2000. His previous forecast was for a decline of 4 percent.
Also, "if terrorist activities and U.S. responses continue" through 2002, Mr. Myers said, the effect on ad spending "could be radical." He now estimates ad spending next year will decline by as much as 7.4 percent from 2001. His previous estimate was for a decline of 1.7 percent.
Some marketers plan to continue ad spending at this time, only not for the products and services they would normally peddle.
The Lee Company, a division of the VF Corporation, will replace the commercials that typically appear for its Lee Dungarees with a spot featuring the brand's spokescharacter, Buddy Lee, promoting the American Red Cross.
"We wanted to do something for our young audience, give them a good message," said David Lubars, executive creative director at the Minneapolis office of Fallon Worldwide, the Lee agency, owned by the Publicis Groupe.
"The greater good is what's good for brands," he noted. "If you look at advertising during World War II, the stuff that was the most powerful was about the greater good." Fallon also produced a special newspaper ad that appeared on Friday for another client, United Airlines, a division of the UAL Corporation, that compared life on Sept. 10 with life on Sept. 11 and ended: "We join you in mourning. As we join you in strength."
The Buddy Lee commercial will run in time slots that Lee had earmarked for product advertising on three cable networks: Comedy Central, ESPN and MTV. Lee spends an estimated $10 million annually on television, print and interactive advertising for Lee Dungarees.
Anheuser-Busch is another marketer that will replace some product pitches with more altruistic messages. About 250 billboards and signs for beer brands like Budweiser and Bud Light - including one on the scoreboard at Shea Stadium - will be supplanted by posters of American flags without company or brand identification.
Anheuser-Busch has also started running a television commercial that salutes the Red Cross and rescue workers. The spot was produced by one of the company's roster agencies, the Chicago office of DDB Worldwide, part of the Omnicom Group.
The Red Cross will benefit from a decision by Nortel Networks to donate $3.5 million worth of commercial time - the company's remaining TV ad budget through the end of the year - to the organization to run public service announcements.
"The greatest use of this time right now is to help the Red Cross do what it does best," said Emma Carrasco, vice president for global advertising and branding at Nortel in Sunrise, Fla. "We hope other large companies will follow our lead." Nortel will continue to advertise in print and online.
Another company making a donation is Cisco Systems, which along with the Y.M.C.A. of the United States is financing a public service announcement for the Y.M.C.A. of Greater New York that promotes unity and tolerance. The spot features the actor Esai Morales from the ABC series "NYPD Blue."
Marketers will be asked to donate commercial time so the spot can be guaranteed to appear, said Hank Seiden, chairman at the New York Y.M.C.A.'s agency, the Seiden Group, rather than depending on the kindness of local stations to run it on a pro bono basis.
There has been anxiety over the plans of the major automotive marketers, because the auto category typically accounts for more ad spending than any other. The Big Three domestic auto marketers are all now advertising.
The General Motors Corporation is advertising individual models like the new Buick Rendezvous all-wheel vehicle - carrying the perhaps now counterintuitive theme, "It's all good" - as well as a promotion, "Keep America Rolling," offering interest-free loans on cars and trucks through Oct. 31. The campaign for the promotion is being created by the Buick and G. M. corporate agency, the Troy, Mich., office of McCann- Erickson Worldwide Advertising, part of the McCann-Erickson World Group division of the Interpublic Group of Companies.
The Ford Motor Company is beginning a similar promotion, "Ford Drives America," to offer interest- free loans on Ford division cars and trucks through Oct. 31. A campaign for the promotion is being produced by the division's agency, the Detroit office of J. Walter Thompson, part of the WPP Group.
The Chrysler Group, part of DaimlerChrysler, plans to resume tonight ads for its Chrysler and Dodge divisions, which are to appear during "Monday Night Football" on ABC. Print ads for the Jeep division, centered on a sponsorship of "Band of Brothers," the HBO mini-series about World War II, resumed last week.
The Chrysler Group will also resume running a Jeep TV commercial for "Band of Brothers" that began appearing on Sept. 10, said James Kenyon, a company spokesman in Auburn Hills, Mich., adding that plans for five additional spots would be modified.
Those spots, which are to include brief clips of scenes from the series, "will be changed to use more of the celebratory footage from `Band of Brothers,' " he added, "rather than some of the more violent scenes" as had been originally planned.
Speaking of anxiety, GlaxoSmithKline has postponed the introduction of a television campaign for Paxil, its antidepressant prescription drug. Two spots from McCann- Erickson New York, directed by the documentary film maker Barbara Kopple, were to have started appearing last Monday.
"We will launch it, but haven't set a date yet," said Holly Russell, a spokeswoman for GlaxoSmithKline in Research Triangle Park, N.C. "We're waiting for the right time."
Stuart Elliott, The New York Times. September 24, 2001
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