Light At The End Of Advertising’s Tunnel

After downgrading overall advertising spending projections on Sept. 20, media consultant Jack Myers is singing a slightly different tune, writing in the Myers Report newsletter that long-term ad spending prospects have improved.

According to Myers, the radical cost-cutting measures being imposed by major corporations will result in better than previously projected ad spending gains from 2003 to 2006, which is welcome (if distant) news for a sector that has been battered by its worst year since the early 1990s.

“As we projected on Sept. 20, the worsening economy and related ad spending cuts will hurt the media business tremendously this year and next,” Myers said. “What we are seeing, though, is a dramatic acceleration in corporate cost-cutting measures in the aftermath of Sept. 11 that ultimately will speed up the recovery process starting in 2003.”

Strange as it may sound, Myers sees consumer magazines and television, both of which have been particularly hard hit by the events of Sept. 11, in line for a more sustained and meaningful recovery. Publisher Conde Nast started off October by announcing the closure of Mademoiselle, which after 66 years in existence was one of the oldest consumer magazine titles in the United States.

Myers also said that the government’s increased receptivity to media consolidation and advancement of standards for new interactive media technologies will boost revenue for Internet and television advertising as early as 2004 or 2005, two years earlier than he previously forecasted. Myers estimates online advertising’s share of total ad spending is expected to grow from 0.9 percent in 1998 to 5.1 percent in 2006, the largest share increase of any medium.

The Interactive Advertising Bureau (IAB) recently announced that online advertising revenues for the first half of 2001 dropped 7.8 percent compared to 2000, and put the blame squarely on the shoulders of a soft overall advertising market. The IAB’s report, conducted independently by the New Media Group of PricewaterhouseCoopers, found that Internet advertising in the United States totaled $3.76 billion for the first two quarters of 2001, with the first quarter accounting for $1.893 billion and the second quarter coming in at $1.868 billion.

CMRi, the Internet division of CMR, found that online advertising spending dropped 10 percent for the first half of 2001 compared to first-half revenue in 2000. When CMR released its mid-year forecast in July, it predicted that overall full-year 2001 ad spending would decline by 2 percent from $104.5 billion in 2000 to $102.4 billion.

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