Slowed Economy Impacts Ad Growth, Agencies Revise Forecasts

Another worrisome sign for Adland emerged Friday as the U.S. Commerce Department reported that the economy grew at a rate of just 1.5% in the second quarter, down one-half of a percentage point from the first quarter, when Gross Domestic Product grew 2%.

Economic growth has picked up in recent quarters, but the April to June period slowed to a pace not seen since the third quarter of last year, per the Commerce Department.

The news follows less-than-robust financial reports from two agency holding companies: Interpublic Group and Publicis Groupe. Both companies reported weak organic revenue growth for the second quarter. On Thursday, IPG reported organic growth of less than 1%, while earlier this month, Publicis Groupe reported 1.6% organic growth for the period.

Adland forecasters such as ZenithOptimedia and GroupM and others saw the slowdown coming and recently downgraded 2012 marketer ad spending estimates.

Commenting on the ebbing pace of economic growth, Acting U.S. Commerce Secretary Rebecca Blank said that it “shows that our economy continues to heal from the worst economic downturn since the Great Depression, but there is much more work to be done."

Blank did note that while growth has slowed, there has been at least some growth for the last 28 consecutive months. “However, our economy continues to face several headwinds, including a drag from a decline in state and local government activity and the economic slowdown in other countries, especially in Europe.”

Blank urged Congress to take action, including a tax code overhaul that would spur small business activity and eliminate tax breaks for companies that “ship jobs overseas.”

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1 comment about "Slowed Economy Impacts Ad Growth, Agencies Revise Forecasts".
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  1. PayPerClickStore .com from Pay Per Click Store, July 30, 2012 at 2:16 p.m.

    Of course we can expect a decline in ad revenue with the worsening economy. The question is which sectors will hold up and grow. My bet is that online advertsing, particularly search marketing will grow in the coming months.

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