Are Economic Indicators Too Late For Networks?



For networks, Tuesday may have come a month too late. Several promising economic indicators were released, the kind that could persuade marketers to put down more in the fledgling upfront. Trouble is, their budgets have likely already been formulated.

Could this be a paradox upfront? All sorts of data is starting to emerge showing the economy is recovering. It’s the kind of stuff that in some years could have contributed to impressive volume increases. Yet, maybe the seeds of this market – what happens in corporate financial suites – may have been planted too early leading to ho-hum results.

Consider consumer confidence is zooming. The Conference Board index came in at 76.2 in May. That’s way above 69 last month and marks the highest level since February 2008.

Other data from the Conference Board out Tuesday shows people expecting a better employment market. Consumers anticipating more jobs in ensuing months increased to 16.8% from 14.3%. (Still, consumers expecting incomes to go up dropped a tad to 16.6% from 16.8%.)

The data follows April’s unemployment rate of 7.5%, the lowest since December 2008 (though still well above pre-Great Recession levels).

Also Tuesday came word of a surging housing market. In March, a 20-city composite from an S&P index showed a 10.9% gain in year-over-year home prices. That’s the highest jump since 2006.

Prices in all 20 cities were up for the third straight month, with 12 of them up in double digits. Data also showed average U.S. home prices have returned to late-2003 levels (though below a 2006 peak).

Then, there’s the soaring stock market. The Dow closed at a record high Tuesday, marking an 18% gain this year, which is going to feed consumer confidence as 401(k) statements arrive.

It’s impossible to predict how the upfront plays out each summer. But it’s curious why one of the Madison Avenue or Wall Street research arms hasn’t yet developed a UPI (Upfront Prediction Index).

It would seem some sort of historical analysis using a bucket of data points might yield a trend. Start with consumer confidence, unemployment, home prices and Dow levels -- then add six more criteria: car sales, box office returns, Wal-Mart sales, Procter & Gamble performance, Amazon results and iPhone sales.

Random? Auto sales offer some indication how much the big-spending car companies might commit in the upfront. Movie companies spend heavily. Wal-Mart is the world’s largest retailer, while P&G is the country’s largest advertiser. Amazon is an e-commerce bellwether. And, iPhone sales offer insight into how much Americans will invest in both home electronics and entertainment.

Of these 10 proposed UPI indicators, six look very strong, including car sales, Amazon and iPhones. predicts auto sales will reach 15.5 million units in 2013, the highest level since 2007. Amazon recently reported North American revenue in the first quarter up 26% to $9.39 billion. In the January-March quarter, Apple sold 37.4 million iPhones globally, a 7% gain.

The four other UPI criteria are solid, but not nearly as auspicious. Unemployment is trending well, but corporations thriving might still look to cut. And, the box office, Wal-Mart and P&G have not been breakout performers.

Always a volatile business, the box office year-to-date is down 7.4% to $3.9 billion. Still, according to Box Office Mojo, that’s pacing above 2011. One could argue using box office results pre-upfront is a weak market indicator since film slates change so much year to year.

Wal-Mart, on the other hand, might be a strong proxy for the retail business. For the 13-week period in the U.S. from Jan. 26-April 26, same-store sales dropped 1.4%. The company did say unpredictable factors such as weather conditions and delays in income tax refunds were contributors, along with lower grocery inflation and the payroll tax increase.

P&G has just installed a new CEO with the unexpected departure of Robert McDonald. According to a transcript of its most recent earnings call, the company said it held or improved share in the U.S. in sectors representing two-thirds of its business, but global organic sales of 3% were in the low end of guidance.  

So, a 2013 UPI might be considered favorable when forecasting what will transpire over the next few weeks. But who’s to say any economic indicators are what they once were. The Great Recession may have ushered in a wary, more plodding new normal.

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