The ad industry is showing signs it might recover next year from the worst slump in its history.
The recession has brought tens of thousands of layoffs and affected everyone from major TV networks to tiny ad boutiques. But as marketers are setting next year's budgets, there are signs of life.
"Overall, the forecast for spending in 2003 looks very strong," says Jack Myers, editor of the daily media newsletter, Jack Myers Report, which tracks ad spending of more than 250 advertising and media executives across the USA. "But while the data looks strong, I can't help but be very conscious of all the negative influences."
Despite the sluggish economy and the threat of war, marketers seem willing to increase ad spending. The boost would move up the ad recovery, which some had pegged for as late as 2004. Now, the industry is looking at ad spending growth of 2% to 3% in 2003 after what's on track to be a flat 2002.
One marketer with big plans is Hewlett-Packard. "You're going to see us be really aggressive," says Chris Morgan, vice president, worldwide sales and marketing for H-P digital imaging. A yearlong, $50 million ad campaign will back 50 new products.
"Companies are in a go-for-it mode," says Tim Spengler, director of national broadcast for Initiative Media Worldwide, ad buyer for Dell and Home Depot. "There's a sense if they don't advertise and take care of their brands, they'll have bigger problems in a year."
Among categories spending more: carmakers, Hollywood, wireless services and drug companies.
Leading talk of a comeback is network TV, where executives are giddy about strong sales for the fourth quarter. ABC says Super Bowl sales are ahead of last year's pace. News Corp. chairman Rupert Murdoch said Wednesday that a TV ad rebound was on track to give the company, which includes Fox, double-digit growth in its 2002-03 fiscal year.
In other media, the signs are more tentative:
- Cable networks. "Marketers want to promote their products to get some sales growth back in the picture," says Joe Ostrow, CEO of the Cable Advertising Bureau. He says national sales are poised to rise 6% in 2003 vs. 1% this year.
- Magazines. Magazine ad sales have crept up since June, with August at 2.7% above 2001, according to the Magazine Publishers of America. "We are seeing, across the board, an uptick," says Ellen Oppenheim an official with the MPA.
- Radio. "2000 was artificially high, and 2001 was likely artificially low," says Randall Mays, chief financial officer for Clear Channel, the largest station owner. "2002 looks like it's getting back to normal, which leaves us feeling good about 2003."
- Newspapers and Internet. Both segments are still ailing and will do good to post a 1% gain next year. Hit especially hard by a falloff in tech and financial services advertising is Dow Jones. The company said Thursday that ad revenue for the third quarter was down 12.7% and profit down 69%. Internet ad sales look to be off 15% this year, according to the Interactive Advertising Bureau, and flat at best in 2003.
With signs of rebound so uneven, some still doubt recovery is at hand. "Overall, it's a heck of a lot better than last fourth quarter, but we still don't know if it's a blip that evaporates," says David Peeler, CEO of ad spending tracker CMR. "The bounce has to expand beyond a couple of media that are doing well."
Theresa Howard and Michael McCarthy, USA TODAY. October 10, 2002
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