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Among the worst.
Report sees .3% ad $ fall, behind only '91 and '61
By Kevin Downey
For the advertising industry, this would have been a great year to have hit the snooze button, waking up again around New Year's Day, 2002.
But just how bad is 2001?
Plenty, indeed.
As it turns out, 2001 will go down as the second worst year in four decades, according to revised ad spending projections by Lehman Brothers, and one of only three when ad spending declined from the prior year.
The financial services company this week lowered its projection for U.S. ad spending to a 0.3 percent decline, compared to its earlier estimate of a 2.0 percent increase.
That’s considerably more pessimistic than the 2.5 percent increase forecast by Universal McCann’s Bob Coen last month but more optimistic than Zenith Media’s projection of a 2.0 percent decline.
The only year worse for the ad industry over the past 40 was 1991, when U.S. ad spending fell by 1.6 percent. Spending in 1961 fell 0.8 percent.
Lehman based its revisions on ad spending data for the months of May and June, which the company says showed continuing weakness in most media. That makes a recovery in the second half of the year highly unlikely.
Yet while spending declines this year have been widespread, Lehman Brothers projects increases for some media.
It forecasts a 5 percent increase in spending for cable TV, which is down from its earlier projection of a 10 percent increase. And Lehman Bros. projects that ad spending will go up about 1 percent on radio and 3 percent for outdoor advertising.
Spending in newspapers is expected to go down 2.5 percent for the year. And expenditures in magazines and on television are forecast to drop 3 percent each.
The ad industry was hit this year by a severe falloff in spending and a reduction of nearly one-third in the number of people employed in advertising.
It’s the first year in a decade that the network television upfront, when ad time for the coming year is negotiated, went down, dropping around 14 percent. Moreover, ad spending projections by virtually every major forecaster have been downgraded at least once.
A big part of the blame for the declines goes back to flagrant ad spending by the dot.coms, which not only drove up prices but set into motion a mad hiring spree by agencies to handle the extra work.
The falloff in spending this year was compounded by a number of factors. The overall economy cooled, many of the dot.coms folded, and 2001 lacked both the Olympics and the presidential elections that had boosted ad spending in 2000.
Lehman Brothers points to a return of the Olympics and to elections in 2002 as possible factors in a recovery in the early part of next year.
The company now projects a relatively healthy 4.5 percent increase in spending for all media in 2002. That’s comparable to Coen’s projected 5.0 percent increase and Zenith’s 4.7 percent increase.
Lehman Bros. also lowered its projection for global ad spending for 2001.
The company now projects an overall increase of just 1.3 percent. It had earlier projected an increase of 3.0 percent but cites softness in U.S. spending as a major factor in the global slump.
Ad spending outside the U.S. should grow by 3.0 percent, which is down from an earlier estimate of 4.0 percent.
Global spending in 2002 is expected to go up 4.7 percent, with spending outside the U.S. projected to increase by 5.0 percent. Both forecasts have been lowered slightly from earlier estimates.
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GLOBAL
ADVERTISING FORECASTS |
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2001 |
2002 |
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|
U.S. Advertising |
Old |
Revised |
Old |
Revised |
|
Cable |
10.0 |
5.0 |
12.5 |
10.0 |
|
Outdoor |
4.0 |
3.0 |
7.0 |
6.0 |
|
Radio |
1.5 |
1.0 |
7.5 |
7.5 |
|
Newspapers |
2.0 |
-2.5 |
4.0 |
3.0 |
|
Magazines |
2.4 |
-3.0 |
4.0 |
3.0 |
|
Television |
0.2 |
-3.0 |
6.5 |
5.0 |
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U.S. TOTAL |
2.0 |
-0.3 |
5.6 |
4.5 |
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Non-U.S. Advertising |
4.0 |
3.0 |
6.0 |
5.0 |
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GLOBAL - TOTAL |
3.0 |
1.3 |
5.8 |
4.7 |
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Source: Lehman Brothers, July 10, 2001 |
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ADVERTISING
FORECAST COMPARISONS |
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2001 |
2002 |
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U.S. (%) |
Non-U.S. (%) |
Global (%) |
U.S. (%) |
Non-U.S. (%) |
Global (%) |
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Lehman Bros. |
-0.3 |
3.0 |
1.3 |
4.5 |
5.0 |
4.7 |
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Universal McCann |
2.5 |
5.0 |
3.7 |
5.0 |
5.5 |
5.2 |
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Zenith Media |
-2.0 |
3.9 |
1.4 |
4.7 |
6.2 |
5.9 |
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Source: McCann Erickson, Zenith Media, Lehman Brothers |
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July 13, 2001 © 2001 Media Life
-Kevin Downey is a staff writer for Media Life.
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