Here's a question everyone is asking: When the stock market tumbles, as it did Monday, are ad spending cuts likely to follow, and if so, how quickly?
   The answer to the first is: not necessarily.
   The answer to the second is: often later rather than sooner.
    Advertisers around the country have been trimming back on spending for months, and it's unlikely that one stock market plunge, or even several, is going to prompt a  further axing of budgets.
   It could well prompt advertisers to delay spending, however.
   Stock prices reflect both company profits and consumer confidence, two of the most essential forces that drive advertising spending.
    "Consumer confidence often manifests itself in the stock market. Share prices reflect how much people are spending, and ad budgets are affected by how much people are spending," says Anne Thompson, a media analyst at Wedbush Morgan Securities. 
    When profits or confidence decline, ad spending often is not far behind.
    Monday’s stock drop of 436 points on the Dow Jones painted a bleak picture for both profits and confidence in the next quarter. 
    But even before Monday many folks had revised their previous predictions of a rough first quarter to include a rough second quarter as well, and maybe even a rough third.
    "I don’t think a media buyer will slash a budget because the market is bad, they’ll slash a budget because their sales forecast isn’t good," says Thompson.
    Others agree that Monday’s drop was a symptom of an overall business climate that's bad for advertising budgets.
    "It’s not so much the stock market as that business stinks right now," says Allen Banks, executive media director at Saatchi & Saatchi. "Advertising budgets will be down because business isn’t doing as well."
    "Business isn’t doing as well because consumers aren’t spending as much. Consumers aren’t spending as much because they’re worried that the money won’t be there, that they won’t have a job," says Banks.
    And many think that though Monday was particularly severe, such a drop and the ensuing advertising cutbacks have been long in coming.
    "The volatility isn’t something that happened in the past few months," says Donna Salvatore, CEO of MediaVest. "There is usually a lag time, but the instability has been there for a while now."
    "Volatility in key economic factors—and Wall Street falls into that—leads to more conservative spending," says Salvatore. "Advertisers aren’t going to go running into this marketplace in an aggressive fashion. Things are clearly different this year when you look at consumer confidence."
    Leo Kivijarv, director of publications at Veronis, Suhler & Associates, agrees.
    "We are hearing from our clients that their advertising dollars are going down. But there had been enough indicators since December that [Monday] was just one more nail," says Kivijarv.
    And the predictions for the immediate future, including the period through the television upfronts in May, are for a buyers’ market.
    "This year’s game will be the same as it is every year. Networks saying it’s not as bad as it is, and the buyers saying it is as bad as it is," says Andrew Donchin, director of national broadcast at Carat.
    "But it’s definitely going to be a buyers’ market this year. Everybody now, especially the sellers that report to major companies, is cognizant of the stock price. And everything they do is to improve that stock price," says Donchin.
    Salvatore agrees.
    "Clearly, with the reduction in spending and the elimination of dot.com business, the psychology of the market is 180 degrees from where it was last year. Now it’s a tentative buyers’ market," says Salvatore.

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