Commentary

Ad Spending Outlook Gives Reason For Cautious Optimism

As despairing as the news about the coronavirus pandemic can be, there are signs the U.S. economy can bounce back and boost advertising sales for publishers. The biggest threat to the recovery is the recent surge in new cases, leading several states to re-issue lockdown orders that halt business activity.

U.S. consumer confidence last month surged the most since 2011, while a measure of factory activity posted the biggest gain since 1980. Of course, those increases were from abysmal lows and remain depressed compared with historical norms, but they show signs that the economy is starting to heal.

Media spending also can recover, if a recent survey of Chief Marketing Officers is any indication. Executives surveyed by consulting firm Gartner Group are expressing cautious optimism about their media spending plans for the coming year, as Search & Performance Marketing Dailyreported.

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That sunnier outlook may give publishers greater hope of much better days ahead, though marketing executives tend to be optimistic as a group.<

While 44% of CMOs face midyear budget cuts because of the pandemic, 73% said they expect the effects to be short-lived, Gartner found. Meanwhile, 71% plan to spend more money in 2021 on website advertising that's meaningful for the digital operations of publishers.

The spending outlook varies by industry, with only 22% of executives in the hard-hit travel and hospitality industries expecting a return to "business as usual" in the next 18 to 24 months. For those industries, the development of a coronavirus vaccine will be especially important in making people feel comfortable about getting on a plane or a cruise ship.

Vaccine development is moving along steadily, with the World Health Organization saying more than 100 possible coronavirus treatments are now in development. Researchers at drug company Pfizer and biotech firm BioNTech last week reported some especially encouraging news about results from an experimental vaccine.

They plan to expand the trial to 30,000 people starting this month. If the treatment is effective, Pfizer can make 100 million doses of the vaccine by the end of the year, and possibly more than 1.2 billion next year, the company announced.

Till then, there are reasons to be cautiously optimistic about the economic recovery and its possible positive effect on media spending.

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