When last month Starbucks announced it was closing stores because of falling sales, it signaled to the greater public what marketers already knew: America was hunkered down for tough times, and had been for a while.
While there are some signs those tough times may now be easing, they are at best weak signals, and the consensus among marketers is that consumer spending is not going to pick up anytime soon.
Nor does it appear ad spending will either.
Carat, the giant media buying shop, has a new forecast out that puts growth in ad spending this year at a weak 2 percent to 3 percent. That's down from the 4.1 percent it forecast back in December and the 3.8 percent it came out with in February.
What growth there is this year Carat says will be due to the Olympics, now set to begin in Beijing, and political dollars flooding into local media markets this election year.
Carat is not all that rosy with regard to 2009, either. It's forecasting another year of modest growth, just over 3 percent, noting that even if the general economy should improve next year it would not lead to increased ad budgets until 2010.
In revising its forecast downward, Carat cites a study in which more than three fourths of marketers polled said their budgets would be flat to down this year.
The revised Carat forecast is just the latest in a string of unwelcome news for media sellers.
Last month, General Motors announced plans to slash costs some 20 percent, with ad budgets taking a comparable hit. Today's Wall Street Journal reports that the giant automaker is asking ad agencies to slash the fees they charge by 20 percent this year and next, which will means layoffs at a number of agencies.
That came just days after Magna's Robert Coen, the longtime media forecaster, slashed his 2008 ad spending forecast to 2.0 percent from the 3.7 percent growth he had foreseen last December.
Coen cited what turned out to be a grimmer-than-expected 2007, in which ad spending was actually down from 2006, off by 0.7 percent.
At the time, Coen wrote: "National advertising growth in the first four months of 2008 has been exceptionally slow for most major media, especially in a Summer Olympic/presidential election year. Things will improve in the second half of this year, but all the present indicators point to far less than a robust growth year for national marketers’ advertising budgets in 2008."
