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ad spending recovery
Sees 1.5% rise for 2002, starting in third quarter
By Kevin Downey
Not only is a recovery proving to be a long time in coming for the advertising economy, but it’ll probably be less than stellar once it does hit, perhaps sometime in the second half of the year.
The latest forecast from CMR projects a 1.5 percent increase in spending, to $96.1 billion, for full-year 2002.
The ad-tracking firm released its forecast yesterday, which includes a 5.4 and a 3.3 percent decline for this and next quarter, respectively, despite an expected $900 million in combined ad-spending for next month’s Super Bowl and winter Olympics.
"We’re clearly coming off of the bottom," says David Peeler, president and chief executive officer at CMR.
"Can you say it’s robust growth? Of course not, but I think there are a couple of trends that point to it being a little better."
CMR forecasts that the first signs of a recovery will occur in the third quarter, when political elections should boost local ad spending. Expenditures in all media are expected to increase by 3.8 percent.
The rate of recovery should pick up after that initial bump. A 10.9 percent increase is projected for the fourth quarter over the same time period last year .
"The fourth quarter this past year isn’t the only one that we’re coming off of," says Peeler. "The previous fourth quarter was not a great one for advertising either.
"So we’re looking at a combination of coming off of that floor and some economic turnaround in the second or third quarter, which should be reflected from a media perspective in the fourth quarter."
Those increases are a welcome change to the ad slump that began about a year-and-a-half ago. But they are only baby steps toward a return to 2000’s record $104.5 billion, a level spurred in large part by a surge in dot.com spending.
Expenditures in 2001 fell by 9.4 percent, based on initial estimates, to $94.6 billion.
"The year 2000 had the internet, which we know isn’t coming back," says Peeler. "That was the size of the automotive category in its heyday.
"Unless you have something that captures the consumer imagination at that level, I think it’s going to take a good 12 to 18 months past the end of this year to get back to those levels."
Although the 2002 recovery looks to be modest, it could have been considerably worse.
The media industry is fortunate to be in an even-numbered year, in which the Olympics and major political advertising tend to give spending a boost.
In addition to the winter games on NBC, upcoming elections are expected to pump well over $500 million into local TV markets, according to the Television Bureau of Advertising.
CMR suggests, however, that rather than providing additional ad dollars, the Olympics and elections seem to be diverting money that would have been spent elsewhere.
The 2002 rebound will mostly be the result of comparing spending to a year in which a recession was deepened by the tragedies of Sept. 11, which pulled expenditures down in the third and fourth quarters.
Perhaps the most positive outlook from CMR is that increases are forecast for all media categories.
The increases range from an 8.8 percent ad-spending rebound for the internet down to a 0.6 percent increase for magazines–a relatively upbeat outlook for an industry hit by the folding of major titles, like Talk, and a 5.1 percent decline in ad revenue through third quarter 2001.
It’s worth noting that ad-spending forecasts are prone to numerous revisions throughout the year and are at best educated guesses made by analysts who track spending patterns and economic trends.
Moreover, CMR’s projections differ from those of some other key forecasters.
The Myers Report projected a 7.4 percent decline in total ad spending for 2002, for example, shortly after the events of Sept. 11.
And Universal McCann’s Bob Coen more recently forecast an overall increase of 2.4 percent.
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2001 and 2002
ADVERTISING EXPENDITURES |
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Quarter |
% Change |
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2001 |
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1st Qtr |
-4.1 |
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2nd Qtr |
-6.4 |
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3rd Qtr |
-12.1 |
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4th Qtr* |
-14.4 |
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2002 |
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1st Qtr* |
-5.4 |
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2nd Qtr* |
-3.3 |
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3rd Qtr* |
3.8 |
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4th Qtr* |
10.9 |
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* Estimate |
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2002 ESTIMATED
ADVERTISING EXPENDITURES |
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Media Type |
% Change |
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Network TV |
2.0 |
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Spot TV |
2.5 |
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Cable TV |
1.1 |
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Syndication |
1.1 |
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Magazines |
0.6 |
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Newspapers |
3.1 |
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Outdoor |
1.8 |
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Internet |
8.8 |
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Source: CMR, a Taylor Nelson Sofres company |
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January 23, 2002 © 2002 Media Life
-Kevin Downey is a staff writer for Media Life.
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