So why are media budgets not rebounding as quickly as we'd all like? My buddy Dave has a sobering answer. (Dave, you should know, is the financial whiz who always buys at the low and sells at the high.) Dave says the economy we enjoyed during the 90s was a phenomenon such as we will not see again in our lifetimes, a complete aberration from the norm. Dave says that despite our fondest wishes there will be no V-shaped recovery, that we’re stuck with an L. Or worse. (And while Dave has lived his life as a pessimist, he has also managed to accumulate more houses and boats than you’d find in a good-sized Mexican fishing village.)
So if CMR's prediction is correct, what does it portend for the media world? For one thing, negotiability. A buyer’s market in the media business shows up in several ways:
(1) as sellers become less confident in making their budgets, they drop their rates to attract more business;
(2) advertisers move budgets into less risky, more accountable media such as direct response;
(3) marketers begin to rethink their need for expensive reach vehicles and start targeting narrower, more efficient market segments;
(4) sellers continue to try to create an urgency which eludes them, as buyers play the waiting game for better deals, and
(5) some media, such as the recently-silenced Talk magazine, simply die.
Combining Dave’s and CMR’s view of the world, we're left with a bunch of struggling marketers (due to the sluggish economy) and a bunch of struggling media (due to the struggling marketers). It's a scenario that has played itself out similarly in many previous recessions, though few have had quite the nasty bite of the one we're in. And, by the looks of it, few have lingered as long as this one likely will. Despite yesterday's rise in the leading economic indicators, the stock market has been down in eleven of this year's first thirteen trading days. So most investors, at least, agree with CMR. And Dave. The good news, if there is any, is that media recessions usually end in a dramatic boom. Caused by the intersection of a revived economy and diminished media availabilities, this coming fourth quarter could be party time for the media.
But in the meantime we're stuck in these ugly doldrums.