Tuesday, January 15, 2008

Advertising Seen Struggling in 2008 and Possibly 2009

Projected advertising budgets would actually be a good leading indicator if you could get the data. From the WSJ Real Time Economics:

After Merrill Lynch and Goldman Sachs issued forecasts last week calling for recession, Advertising Age magazine asked several advertising and marketing execs what that could mean for the industry. Their answers varied, but many were surprisingly worried about the outlook not for this year, but for next year. Martin Sorrell, CEO of ad firm WPP Group, said the summer Olympics, presidential election, and European soccer championships mean a healthy advertising year in 2008. “‘08 is not the issue;” he told Ad Age, “‘09 is.” Morningstar analyst Larry Witt said that “If there is a recession and it stretches into 2009, it’ll be bad.”

Many noted that advertising is already feeling the pinch of an economic slowdown.
Jon Swallen, senior vice president of research at TNS Media Intelligence, said “we’re already seeing a flattening in [ad] spending by department stores, restaurants and a host of categories related to housing.” Chuck McBride, executive creative director at Cutwater, said “It’s starting to hit home now. I get the feeling clients don’t want you to spend as much, to save money where you can and do more.”

Finally, Kia Motors chief marketing officer, Ian Beavis, had this to say about the beleaguered auto industry:

“You can smell recession. Dealership traffic is down [across the board]. There is more negative equity in cars [being paid off through loans]. New loans are being made for extended loan cycles of 72 to 84 months, longer than most marriages last. And none of us have seen the impact of $100-a-barrel gas prices. It’s a train wreck.”

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