Media economy
Readers: Recovery? What recovery?
By Louisa Ada Seltzer
Aug 24, 2009 - 9:30:31 AM

Economists are saying we're nearing the end of this recession, and they may well be right, but media planners and buyers don't see it playing out in the media economy as yet.

They see this ad recession, already believed to be the longest since the end of World War II, going on a bit longer.

They don't see much evidence that it's going to end by the fall, contrary to what some media forecasters were predicting a few months ago.

That less-than-rosy view comes out of a survey of readers Media Life posted last week.

Asked whether they though the recession was ending, just 12 percent though it was.

Some 41 percent thought things had gotten better but that we were still in a recession, agreeing with this statement: "Not quite, but we're getting there. The stock market is still bouncing around, and clients remain spooked. That said, things are definitely better than they were three months ago, and I think things may be looking up by year's end."

And a similar number thought we still have a way to go, agreeing with this statement: "No. Retail sales dipped unexpectedly last month, and foreclosures remain way up. I think the media jumped on a few positives and overblew things. From what I see from clients, they don't expect substantial improvement until next year."

Media planners and buyers say clients are somewhat more upbeat than they were some months back but still not ready to kick up spending.

Asked whether they sensed a turnaround in the media economy from the attitude of their clients, the largest share, 32 percent, did not, agreeing with this statement: "No, they are approaching things the same as six months ago, cautious and wary."

Just over 30 percent saw some change, agreeing with this statement: "Just a bit. They have a more positive outlook than six months ago but they are still largely cautious and wary." An equal share agreed that things were a bit more positive, but not by much, agreeing with this statement: "Yes, but it's slow going. They're more open to ideas but not quite ready to pump up their advertising."

Just 5 percent report that clients have put this ad recession behind them, agreeing with this statement: "Yes, they believe things are on their way up and they're ready to start spending."

Perhaps more telling, fully half of respondents, 50 percent, say business at their agency has not gotten better over the past six months.

Just 4 percent report a notable uptick in business. Half of those say business is well up from six months ago but still down from 2008 levels, with the other half saying business is booming.

Some 30 percent say business has improved somewhat over the recent months as the result of new clients spending and existing clients increasing their spending.

When will the ad economy begin showing improvement?

By far the largest share of respondents, 41 percent, say second-quarter 2010.

Just 3 percent think in third quarter, while 17 percent think fourth-quarter 2009.

Twelve percent think first quarter 2010, 14 percent third-quarter 2010, and 3 percent fourth-quarter 2010. Ten percent don't see recovery coming until 2011.

And once recovery begins, when will we spring back to prerecession levels of ad spending?

Here media people were all over the calendar. Fourteen percent thought second-quarter 2010, 21 percent second-half 2010, 16 percent thought first-half 2011, 10 percent second-half 2011, while 17 percent thought not before 2012 and 22 percent thought after 2012.

Media Life wanted to get a sense of what readers thought of the Cash for Clunkers program and its effect on the ad economy. The answer, in brief, not much.

Just 14 percent though it did a lot in terms of boost automotive ad spending on local TV over the recent weeks.

The rest dismissed the government incentive program as bringing about just a bit of a boost or not much of a boost at all. In a related question, readers largely dismissed incentives, agreeing that the ad economy would come back as the U.S. economy recovered.

As one respondent wrote, "The recovery is coming more from the slow rebounding of the economy on its own."

As to the sectors of media that have been hurt the most, newspapers topped the list at 41 percent of respondents, with magazines second at 26 percent.

In terms of which will recover soonest, the internet led at 33 percent but not far behind was broadcast at 28 percent. Cable was No. 3 at 21 percent. Out of home came in at 11 percent. Magazines and radio came in each at just over 3 percent.

And what will be the lasting impact of this ad recession? Will it have any lasting impact?

The answer is, yes, it will have a lasting impact, in fact several.

Invited to agree with more than one statement, just 18 percent of readers thought there would be little change with recovery, agreeing with this statement: "Change will be minimal. Once recovery comes, advertisers will revert to their old habits, buying the media they were most comfortable with before the slowdown."

Most readers see several changes and the biggest change will be a shift to less-expensive media, with 67 percent agreeing with this statement: "The slowdown will accelerate the ongoing move from traditional media to lower-cost, lower-out-of-pocket, more accountable media."

The No. 2 response, at 45 percent, was: "We will see even more newspapers fold in major markets and from that the birth of online-only newspapers that reinvent local journalism, and for the better."

Third, at 20 percent: "The slowdown will lead to the breakup of a number of media conglomerates, as sharply reduced revenues force them to sell off units for whatever they fetch."

Some 18 percent agreed with this statement: "The slowdown will put a brake on a lot of the more interesting trends in new media, such as social networking, as capital dries up to sustain new ventures."

And 4 percent agreed with this statement: "The slowdown and public outrage over corporate misbehavior will lead to a whole new era of media regulation favoring smaller players at the expense of the conglomerates."