• by Jack Loechner , Staff Writer @mp_research, January 18, 2004

Newspapers Looking Up

A recent release by the NAA reports that the sharp employment drop three years ago had a devastating impact on help wanted advertising in newspapers, which suffered a dollar decline of 35 percent in 2001, another fall of 23 percent in 2002 and another estimated 10 percent reduction last year. From a peak level of $8.7 billion in 2000, recruitment advertising plunged more than 50 percent to just under $4 billion last year.

Peter Appert, publishing analyst with Goldman Sachs in New York City, wrote on Nov. 12, 2003, "We believe newspaper help wanted revenue comparisons will turn positive in [first quarter 2004], following three years of decline. Easy comparisons, improved employment market conditions and improved market share performance versus online competition will drive this recovery." Some Wall Street analysts are looking for near double-digit percentage gains by fourth quarter 2004.

Real estate advertising has been a stellar performer throughout the recession and recovery, with spending increases of 11 percent in 2001, and another 5 percent in 2002. Record-low interest rates boosted spending in the first half of 2003 by nearly 9 percent, before finally falling back below 5 percent in the third quarter. The situation for 2004 should be positive, although not quite at the level of the past three years. With interest rates floating upward, the housing market is unlikely to maintain generating peak levels of sales as it had recently.

According to Douglas G. Duncan, chief economist for the Mortgage Bankers Association in Washington, "The housing market will remain strong through 2004 and 2005, though it will return to a role of sharing leadership in economic growth rather than being the flag bearer for the entire economy."

US Daily Newspaper Ad Expenditures ($x000,000)

	National	Retail	Classified	Total
2001	7,004	20,679	16,621	44,305
2002	7,210	20,994	15,898	44,102
2003 (Est)	7,841	21,481	15,722	45,045
2004 (Fcst)	8,351	22,126	16,430	46,907

Source: NAA Business Analysis and Research Department

With the improving economy, as more and more of the nearly 9 million unemployed go back to work, retail sales and retail advertising will get a little better. Preprints should continue their long-term growth, along with the smaller retail categories, even as department stores struggle to reorient their operations to new realities in the consumer marketplace.

National advertising in newspapers has rebounded nicely since the recession. Telecommunications, technology and factory automotive drove gains in the first half of last year, more than offsetting weakness in travel advertising. National marketers are expected to persist expanding their advertising budgets in 2004. As some of them get crowded out of the television market in this Olympics and presidential election year, newspapers should stand to benefit from limited broadcast inventory.

All told, the newspaper advertising business can reasonably expect a gain of about 4.1 percent this year.

You can find out more here.