Commentary
Slow, But Sure?
- by April 26, 2001
Jim Conagham, Newspaper Association of America's (NAA) vice president of market and business analysis, developed an extensive forecast report in early 2001 based on the reporting of several renowned research services and sources. While the numbers will see some roller coaster revisions for several weeks, the magnitudes and relationships give a good benchmark for the development of plans and strategies for the year.
One interesting perspective on how things might fall apart was offered by Business Week editor Michael Mandel in "The Coming Internet Depression." Mandel theorizes that the new technology-business cycle means longer economic expansions followed by deeper and harsher recessions. So, Conagham says ...
The 2001 advertising outlook mirrors the expected trend for the overall economy: more dollars spent but at a growth rate a little lower than the previous year. McCann-Erickson Worldwide Senior Vice President and Director of Forecasting Robert Coen now estimates advertising in all media will increase 5.8 percent in 2001, down from his initial estimate of 6.5 percent, predicted last June.
UBS Warburg analyst Leland Westerfield also looks for a 6% increase in total ad spending. Westerfield expects radio to gain 8 % overall, with the national component up 12% and local rising 7%. He looks for consumer-magazine advertising to climb 6% next year.
Ad Spending Forecasts, 2001 and % increase
+--------------------------------+----------+ | Forecast
| Increase | +--------------------------------+----------+ | Veronis, Suhler & associates | 7.0% | | Miles Groves, The Barry Group | 5.1 | | NAA | 5.1 |
| Economy.com | 4.7 | | UBS Warburg | 4.5 | | McCann-Erickson Worldwide | 4.4 | | Morton Research | 4.0 |
+--------------------------------+----------+
The 2001 forecast from the Television Bureau of Advertising in New York City anticipates small spending gains: up 1-to-3 % for national
spot advertising, 3-to-5 % for local spots. Network advertising might be up in the 7-to-9 % range, according to the bureau, with cable-television advertising hikes staying in the teens-percentage
range.
Newspaper Advertising Forecasts ($billions/% change)
+----------------+-------------+----------+----------+----------+ | | Classified
| National | Retail | Total | +----------------+-------------+----------+----------+----------+ | 2000 Est | $19.7/5.5%+ | 7.7/14.1 | 21.5/3.0 | 48.4/5.1 | | |
| | | | | 2001 Projected | 20.7/5.3% | 8.5/10.4 | 22.2/3.0 | 51.4/5.1 | +----------------+-------------+----------+----------+----------+
source: naa
Research and Analysis Department
The Association's numbers suggest that newspaper publishers will again struggle to a 3 percent dollar gain in retail advertising during 2001.
The cyclical behavior of Classified advertising will persist. Industry estimates suggest that annual automotive sales in 2001 will be down by nearly a million units from the 2000 level of 17.4 million. In short, newspaper classified advertising growth will be modestly slower in 2001. Look for an overall gain in the 5 percent range, driven primarily by recruitment ads.
Proliferation of niche publications, cable-television channels and radio stations can be attractive in terms of targeting small audiences, but amplifies the need of putting together multimarket ad campaigns to build audience for mass-market products. The long-term trend argues for an increase in national advertising in newspapers as fragmentation continues to make it difficult for advertisers to deliver messages to mass audiences using media designed for market segments.
Categories such as medical products and drugs, toiletries, and other packaged goods, entertainment, telecommunications and utilities will provide growth this year, and national advertising should manage a double-digit increase in 2001, even with reduced income from the dot-com segment.
