The headlines read pretty clearly: The ad economy is hurting with the rest of the economy and perhaps more so, with few signs of a turnaround through the end of the year.
    But it may not be as bad as the headlines suggest.
    Yes indeed, many advertisers are cutting ad spending, but a number of others are boosting ad budgets to take advantage of lower prices and the absence of advertising by competitors.
    According to CMR, spending by the top 25 brands was down 10 percent in January, but nine of those brands showed increases.
    "When you pick up the newspapers, you see the big, bold headlines about the bad things," says Kevin Coyne, executive vice president and director of media and new technology at Bates North America, voicing a feeling shared by other media buyers.  "There are good things too, but they are somewhere else in the newspaper."
    Behind the gloomy reports, now so much in fashion, economists are finding a substantially healthy economy.
    "What we’re finding is that the recession wasn’t as bad as people thought it might have become," says Jack MacKenzie, senior vice president of entertainment at Frank Magid Associates, a media research company.
   "And I’m not sure that people aren’t spending money. There just aren’t as many people spending big money on image campaigns."
    For all the talk of budget slashes, what's really going on is that buyers now have the advantage and they are taking that advantage, in effect playing possum until buyers bring them deals they think are attractive.
    Telling sellers your ad budget has been shredded is certainly a good opening ploy.
    Call it buyers' revenge, with a capital R.
    Last year, TV buyers rushed into the upfront market and spent record sums over just a couple of days. The mood was one of panic, lest a buyer lose valued inventory to a competitor, and sellers drove the market on that fear, running buyers as so many sheep being rushed to slaughter. It was not pretty.
   This year, there are fewer buyers in the market and there's also the weak scatter market and not a lot of reason to believe that the market will gain in strength through the year.
    Buyers are saying, in effect, I can buy now or later, so maybe I'll buy later.
    Also at work is the increasing number of options before buyers.
    "As there are more and more entertainment choices that come through the television set, there are more opportunities for companies to target whom they want to receive their message," says MacKenzie.
    "The more choices consumers have to watch, the more choices [brands] have to advertise. I think they feel they have a better opportunity to wait it out and see how the chips fall.
    "One of the reasons you bought upfront was to protect yourself. I don’t think there’s a feeling that there’s as much importance in protection as there used to be because there’s a lot of opportunity," he says.
    One reason fewer ad dollars are in the market has little to do with the slower economy.
    Bates’ Coyne says: "The merger mania of the last couple of years, and the need to sit back and digest and then answer to Wall Street on whether or not it was a good deal, is probably overpowering the marketing budgets at the moment."
    Cuts in budgets are hardly across the board.
    While some technology-based companies have pulled back from the spending frenzy of last year’s dot.com craze, for others, spending is actually up in a number of product areas and by specific brands. 
    Some of those increases were substantial.
    Bud Light, for example, spent 47 percent more in January 2001 than it did last January.
    Spending by Subway was up 88 percent, AT&T Wireless spent 74 percent more, and AOL more than doubled its ad spending.
    "If you were to take the clients that tend to work on budgets that are based on a percentage of sales, those budgets are not affected at all by the downturn," says Coyne. "In fact, if anything, they might be up a bit.
   "But if you take clients that are in more of a marketing mode, where their advertising and marketing budgets are more discretionary, they are the ones that seem to be holding back."

May 29, 2001 © 2001 Media Life

-Kevin Downey  is a staff writer for Media Life.