• by Erik Sass , September 23, 2008

In years past, the fourth quarter has been a bonanza for newspapers and radio, with advertisers pouring literally billions into holiday campaigns between Thanksgiving and Christmas. But in 2008, the situation could be reversed, if trends from the last few years are anything to go by. Bottom line: both media are heading into a "perfect storm," as secular downturns appear to be aligning with the grim economic situation with almost cosmic inevitability.

 

 

There is no question that the fourth quarter will be tough, with consumers tightening their belts and retailers feeling the pinch. According to TNS Retail Forward, holiday sales this year will grow just 1.5%, to around $527.5 billion--their lowest rate of increase in 17 years.

TNS blamed a laundry list of economic woes for the downturn, including foreclosures, the high price of gas, growing unemployment and tightening credit. If advertisers rein in spending on national and retail advertising in traditional media, newspapers and radio -- which are already suffering--will take even bigger hits.

For decades, the fourth quarter was always the biggest quarter for newspaper advertising revenue, as weekend editions became bloated with retail ads and national brand promotions. But in recent years, the downturn in newspaper ad revenues has been felt most in dismal 4Q figures, which have taken blows year-over-year.

In 2006, fourth-quarter revenue dropped about $300 million (2.2%) to $13.99 billion; in 2007, it fell $1.4 billion (10.3%) to $12.5 billion. These drops came when the economic outlook wasn't quite as bleak as it is now.

Similarly, radio advertising was traditionally strong in the fourth quarter, but saw this mainstay erode in recent years. In the fourth quarter of 2007, local revenue slipped 3% and national revenue 11%, compared to the same period in 2006, powering a total decline of 4% to $5.4 billion.

The fourth-quarter decline came in the midst of a long-term drop, beginning with a 1% drop in the second quarter of 2007 and accelerating since. Total revenues fell 5% in 3Q 2007, 4% in 4Q 2007, 5% in 1Q 2008, and 6% in 2Q 2008.