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will rebound with a snap
But a brief hiccup in a robust advertising climate
By Marty Beard
If there is a sense of despair along Madison Avenue over the online ad slowdown, it's not being shared by executives who make key ad-buying decisions.
Ad executives are actually optimistic about the state of ad spending for the coming year, according to a recent report by Myers Reports, "Media Recession 2001: Real or Self-Fulfilling?"
The report suggests that much of the gloominess over the current ad slowdown is self-fulfilling--I worry about it so therefore it is--and not based in fact.
It says that the high volume of dot.com deaths has contributed to a cloud of pessimism that obscures almost everything about the internet, including online advertising.
The report projects an increase in all ad spending by the fourth quarter of this year.
"We believe the media economy is merely experiencing a cyclical hiccup in what will be a period of sustained economic growth," writes Jack Myers, CEO of Myers Reports.
As part of the study, Myers Reports questioned 100 ad agency executives, both in 1999 and at the end of 2000.
The bulk of them described ambitious online media spending plans for the next year to year-and-a-half.
Specifically, the Myers Ad Confidence Index for December 2000 rose 1 percent, to 69.04 in 2000 from 68.37 in 1999. The index is compiled by calculating the percentage of ad executives who either plan to raise, lower or maintain their level of ad spending over the next 12 to 18 months.
The report predicts that internet advertising will grow by 70 percent over the course of 2001 to $8.1 billion.
This growth rate of course isn’t what it used to be online. According to Myers Reports' numbers, dot.com advertising grew by nearly 190 percent in 2000 after experiencing over 400 percent growth in 1999.
"That's quite a decrease in terms of gross percentage," says Janet Stilson, senior vice president and editor of Myers Mediaenomics. "Still, you’ve got almost 200 percent growth."
That’s still healthy growth, she says, particularly considering the way the financial market turned sour for dot.coms last year.
Somewhere along the way, say the Myers folks, people in the media industry as well as journalists reporting on the industry, have mistaken a necessary slowdown for Armageddon.
"Ask anyone in the media industry how the dot.com category is doing," says the report, "and they’ll say it’s ‘dead,’ ‘disappeared,’ ‘drying up,’ or any of a number of descriptions that defy its reality."
The dot.coms that are going under aren’t helping perceptions, since they are often blaming their demises rather particularly on slow ad sales.
"Much of the consternation and fear of a sustained recession in the media industry is the result of overly aggressive and, in our opinion, misinformed press reports," Myers writes in the report.
He believes the publicity surrounding the admittedly slower financial market for internet companies is fueling something of a self-fulfilling prophecy.
"The media tend to chase the same story, reinforcing market perceptions with their coverage. Much of the media focus during 1999-2000 was on the incredible surge in dot.com spending, so it is natural that the media would adopt a contra point of view as a ‘fresh angle,’" the report says.
But as Myers sees it, there isn’t really that much to worry about as far as online advertising goes.
It's worth noting that the $8.1 billion figure Myers projects for 2001 is pretty much in line with predictions of other analysts. Merrill Lynch's Henry Blodget, for example, says that online ad spending will hit $8 billion this year. But Blodget considers $8 billion flat, while the Myers Report, since it claims to have maintained a more realistic outlook even during the boom, thinks that $8 billion is just fine.
For instance, says Myers, many pundits forget that 2000 was an unusually active year for advertising, in part because of the Summer Olympics and the presidential elections.
Myers furthermore believes the current slump in media spending will be followed by continued growth in the media industry, something that the recession-crazed pundits don’t go around talking about.
Regarding this, Myers believes a certain pack mentality is at work among journalists covering the dot.com scene. He’s even documented it. During the fourth quarter of 2000, according to Myers Reports' analysis of news coverage archived on Dow Jones Interactive, the volume of press coverage focusing on a looming recession was double the amount of coverage about an impending recession in the first, second and third quarters combined.
-Marty Beard is a staff writer for Media Life.
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