• by Frank Saxe , March 5, 2003

The threat of war, a gloomy economy, and dire predictions of a crash in the automotive business combined in a troubling troika during a forum on advertising visibility held in New York Tuesday. That is not to say there were answers, since chief executives and financial gurus can’t seem to agree on where things are going.

“It is almost impossible to get a honest visibility read for any industry right now, because people would rather be negative,” assessed financial journalist Jim Cramer, who moderated the event sponsored by Primedia. Instead, advertisers and buyers have begun watching key categories more closely than ever, hoping for a clue on where things are going.

One industry that advertisers are keeping tabs on is automotive. With fresh doses of bad news from both Ford and General Motors this week, there was plenty to chew over. While car dealers spent 14.1% more in 2002 compared to 2001, those millions were used to push zero financing packages. “That is no longer having the effect on the consumer,” said auto industry analyst Maryann Keller. Combine that with a SUVs quickly become a roadside pariah and Detroit’s looming contract talks with its labor unions, and she predicted ad spending may be in for a drop.

So far that has not happened, according to ABC National Television Sales president John Watkins. ABC’s owned and operated stations see auto spending up 6% in the first quarter of the year, helped in part by the network’s broadcast of the Super Bowl. That’s important, said Watkins, because auto can account for as much as 35% of a station’s revenues in mid-sized markets like Raleigh-Durham. Coming of a year in which 17.12 million cars were sold, the National Automobile Dealers Association forecasts the market will “moderate” in 2003, with between 16.3 and 16.5 million units sold. “I don’t think the consumer is done yet,” said NADA chief economist Paul Taylor. Even if a war breaks out, he predicts only 200,000 fewer cars will be sold.

MindShare president/CEO Marc Goldstein said advertisers are still trying to sort out a number of variables. “If we go to war, clearly there will be reductions in automotive and other advertising depending on the length and after-affects of a war.” That could play into the launch of nearly two dozen new cars, trucks and SUVs expected to reach the market later this year. While some brands will get little ad support, others will get a great deal, said Goldstein. “I think it will be fairly stable when it all net out, partly because they have to sustain the business.”

The portfolio of the public is what is keeping the needle on financial services advertising in the red. Not only are people not yet ready to consider putting money into the market, but also the firms themselves are under pressure. “When you have to chose between increased investment versus layoffs, those are some tough choices,” said Cigna VP/marketing Edward Faruolo.

That is not uncommon, said research consultant Robert Shullman, who works with a number of financial advertisers. “Most have been staying on the sidelines or maintaining what they’re spending – but they can turn it off at any moment.” Pointing to Citicorp’s multi-million dollar cross-magazine deal with Conde Nast and Time, Inc., Shullman noted that a number of advertisers are shifting to less male-dominated media in recognition of the women’s role in family financial planning. Cigna is among them, said Faruolo, noting that his company is spending twice as much on advertising compared to 1997 levels. At the same time, Cigna’s message has transitioned from one of growth to sustain.

One high-growth ad category that may be in trouble is pharmaceuticals. “Most budgets will be coming down in the next few years,” predicted NFO FYI senior VP Ken Sobel. The reason, said Sobel, is that the drug companies have simply been spending more money than they need to marketing new drugs.

In the meantime, pharmaceutical marketers are targeting primarily the oldest of TV viewers and that makes the current reality craze more of an obstacle course for planners. Carat USA president Charlie Rutman said there are fewer available shows in which to run an ad about a serious health issue. “It’s not enough to be reaching people at the right time; you also have to have the right environment,” he said, adding Carat buyers are presently reviewing how to steer around what is expected to be a summer glut of reality shows.

“There are some environments that we would shy away from regardless of our return on investment,” agreed Sobel. He said drug makers would continue to seek out news, arts-related specials like the Kennedy Center Honors, awards shows, movies, and sports.

That same line of thinking carries over to a possible wartime marketplace. “You want to be out there with a right message for the time,” said Pharmacia media manager Paul Silverman, comparing a war to the post-9/11 decision to pull a “Celebrate!” campaign for one of its drugs. If there is a conflict, he predicts, “You will see most people stop initially.” Outside of the newsweeklies, he said most print buys would not be affected, however.

Yet the print media’s lead-time is the reason it probably won’t see much from the growing entertainment category. “You have to schedule your print before the flow chart is done in order for it to work,” complained MediaCom co-CEO/CNO Jon Mandel. The explosion of the DVD market has led to a surge in theatrical spending. One recent report had motion pictures accounting for 8% of all TV commercials. Mandel credits the DVD, which along with the in-theater release date has added an on-sale-now release date. “It has essentially doubled the movie business. For every movie, you have two openings and that’s driving entertainment advertising.” What may drive that future are the results of a research project being done by Nielsen Media Research, which aims to connect advertising to ticket sales.

Although some worry about the potential saturation of the consumer, E! Entertainment Networks executive VP David Cassaro said considering the times, it is no surprise that movies, DVDs, and TV tune-in are a growth category. “They represent an escapism that takes your mind off of what is going on in the world.”