CMR Says Ad Spending Will Drop
- by July 30, 2001
Due to the continued weakness in the U.S. economy, major advertisers and businesses have been forced to manage through softened economic conditions. As a result, advertising and promotion campaigns are often the first to be cut in budget-tightening efforts.
“After a look at the first quarter ad-spending numbers, which were down 5.2% across all media, as well as taking into account the current economic outlook, it is clear that 2001 will not be the stellar advertising year that we all experienced in 2000,” said David Peeler, president and CEO of CMR.
“Nevertheless, we must keep in mind that we are coming off a year (2000) in which there was both a presidential election and an Olympics, two factors that have always dramatically increased ad spending. Overall, the advertising industry is still ahead of where it was in 1999.”
In 1999, total ad spending across all media was $92.1 billion, according to CMR. That number grew 13.5% to $104.5 billion in 2000. CMR’s mid-year forecast predicts ad spending will decline 2% to $102.4 billion for 2001. Despite the ad spending cutbacks the industry has experienced this year, CMR still sees a two-year growth trend from 1999 to 2001 of 11.2%.
Although spending has been weak during the first half of 2001 compared to 2000, it is typical to see a seasonal growth pattern in fourth quarter spending, allowing for a recovery in the marketplace by year-end. In the fourth quarter of 1999, CMR reported total ad spending across all media was $27.4 billion and in 2000 the total spending was $29.1 billion, an increase of 6.5%.
“While the continuing fallout from the decline of the dot-coms is a major factor in our forecast, the slowdown in ad spending cannot be entirely focused on the dot.com crash,” said Peeler. “Most of the major media that we monitor is down this year, primarily due to ad budget reductions in certain key advertising segments, such as automotive and telecommunications.”
