The outlook for January: Not so hot

With the fiscal cliff looming at the end of the month, advertisers are pouring money into advertising as the fourth quarter comes to a close, uncertain what the new year will bring.

That will stop when the year ends, likely leading to a slow first quarter for the media economy.

Media buyers say that their clients are approaching 2013 with caution, worried that if President Obama and Congress do not reach a deal on the fiscal cliff, the country will be plunged back into a recession.

And so advertisers are spending money now, with consumer confidence at what may turn out to be a temporary high, in hopes of tapping into some of that optimism before January, when taxes could rise for a wide swath of Americans and thus cut into consumer spending.

“The uncertainty in Washington is going to have an effect on the consumer,” one media director tells Media Life.

“Consumers will have less disposable income because of taxes, which are going to go up. The only question is how much, and there could be an impact on what kind of money is spent next year.”

She says advertisers are being very conservative heading into the new year because of the economic uncertainty.

Should the country go over the fiscal cliff next month because the two sides do not reach a deal, there would be big tax increases across the board for all Americans.

But if the fiscal cliff issue is resolved before January, and tax increases are kept to a relative minimum, buyers expect that advertising will pick up as the year progresses.

“If taxes are moderate and digestible, and consumers feel confident, I can see ad sales picking up in the second half of next year,” the media director says.

In the meantime, buyers say, ad sales are picking up for the end of the year, with retailers leading the gains as the holidays approach.

Some markets are seeing increased demand for TV, though in other markets digital media is getting the bump.

“I’m seeing about flat in TV. Extra dollars are being spent in online and mobile this year,” one media buyer says.

Out of home and radio are seeing spending increases to end the year as well, but other traditional media, most notably magazines and newspapers, aren’t gaining from the pre-fiscal cliff rush, buyers say.

Tags: 2013 forecast, ad sales, ad spending, advertisers, advertising, advertising spending, buyers, consumers, first quarter 2013 ad spending, fiscal cliff, fiscal cliff advertising, media, media economy, media life, out of home, tv