Ad Forecasts Go Into Double-Digit Free-Fall, Interpublic Cites New Consumer Research

Two well known industry sources - Interpublic and consultant and publisher Jack Myers - have issued the most severe revisions yet on the outlook for 2009 ad spending in the face of a continually faltering economy. Based on new, proprietary consumer research being released today, Nick Brien, CEO of Interpublic's Mediabrands division, now says the global ad economy could recede "10% to 15%," and U.S. ad spending could be off by as much as 20%.

That's a marked downturn from Interpublic's last official forecast three months ago. When Director of Forecasting Bob Coen released his annual outlook at the UBS conference in New York in early December, he projected worldwide ad spending would fall 0.3%, and U.S. ad spending would contract 4.5% during 2009.

But Mediabrands chief Brien says the increased pessimism reflects some fundamental shifts detected in among consumers - shifts that Interpublic calls "permanent" and "game-changing," and which will last well beyond the cycle of the current economic downturn.

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Myers, meanwhile, will officially release his new outlook today, calling for a 12% reduction in U.S. ad spending during 2009. Local media, such as newspapers, spot TV and radio, will be most adversely impacted, declining 20% year-over-year, while emerging media will continue to expand, albeit at a relatively tepid rate of +5%.

The revisions, while among the most negative published so far, are part of an ongoing progression of downward expectations for the world advertising economy, which is mirroring eroding expectations in the macro economy.

That's clearly evident in the new Mediabrands research, which conducted a series of in depth, face-to-face interviews with consumers in the U.S., China and Australia to determine how the global economic crisis is changing their perceptions and behaviors.

The top line from Mediabrands' research shows that the level of "anxiety" has risen to acute levels among consumers, and they are shifting from a "want-based" society to a "needs-based" society." Mediabrands calls these shifts "permanent," and says it will forever change the "game" of consumer expectations.

"The recession is impacting the majority of consumers in one of two ways," Mediabrands writes in a new report that will be presented by Brien at an Ad:tech conference in Australia, "either directly (lost job/reduced salary, loss in investment, higher consumer price index [China]), or through a reaction to what might happen (previous recession experience, fear of unemployment, friends/family already impacted)."

The result, the report finds, is that "underlying consumer sentiment is abysmal and can be summed up with words like "scary", "dismal", "depressing", "harder", and "concerning."

The implications for media and marketing are multifold, but the study suggests that certain forms of media are becoming even more vital to consumers, while others are likely to wane should the economic downturn continue. While Internet and mobile media are deemed indispensable "lifeline" media, consumers said they are likely to cutback on subscription TV services and/or wired phone services should their belts tighten further.

The new research will be presented publicly as part of an upcoming webinar, "New Media Strategies in a New Recession," which will be held March 26th. The webinar draws from the new consumer research, as well as the expertise of Interpublic's Emerging Media Lab, and its Marketing Accountability Partnership (MAP).

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