Imperfect storm: Sandy hurts ad $ forecast
Hurricane cost TV and radio stations millions
November 2, 2012
In its devastating sweep up the East Coast, Hurricane Sandy knocked out web sites, radio stations and TV broadcasts, temporarily closed down dozens of ad agencies and forced magazines to rearrange their deadlines.
All that disruption is going to deliver a punch to the media economy.
The storm has prompted one major forecaster to reduce his outlook for U.S. ad spending for the remainder of the year,
Brian Wieser, senior analyst at Pivotal Research Group, says that Sandy has further deflated an already-struggling media economy.
He has revised his forecasts for third and fourth quarter of this year, predicting a 0.5 percent decline during third quarter, compared to an earlier prediction of 1.2 percent growth, and a 1.4 percent dip in fourth quarter, compared to an earlier prediction of 0.9 percent growth.
Wieser now expects total ad spending this year to be flat to 2011, at 0 percent growth, compared to an earlier forecast of 1.4 percent growth (excluding political and Olympic spending).
Wieser is also downgrading his prediction for next year, putting growth at 1.2 percent, off from his original forecast of 1.7 percent.
Pivotal has been cautious about its 2012 outlook all year, noting fears about another recession prompted by the fiscal cliff and a general wariness of committing to major advertising initiatives by a number of companies.
Now Sandy has compounded those concerns.
“If we assume that spending equivalent to one day of the fourth quarter was ‘lost’ (because of interruptions to local TV and radio programming for several days in a significant portion of the country paired with the impact on decision-making among national marketers and media buyers based in the storm’s footprint), the storm will cost the industry almost $500 million of activity,” Wieser says in the report.
Television is of particular concern. Wieser notes that broadcast ratings this fall are below what had been guaranteed during the upfront and predicts that ad revenue will be down during fourth quarter, partially related to Sandy.
“[Network and cable TV] are those which are primarily being impacted both by the decision-making paralysis driven by the fiscal cliff and also by delays associated with the storm,” says the forecast.
Wieser also has a more conservative outlook on digital media than many forecasters, lowering his prediction for 2012 growth from 5.1 percent to 4.1 percent.
“We have generally brought down our expectations for growth in conventional display advertising and in online video while significantly expanding our expectations for mobile advertising,” the report says.
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