JackMyers: Ad Spending to Continue Weakness in 2009, Forecast Slightly Better for 2010

Advertising spending continues in a downward spiral this year and will drop 12% in 2009, although signs indicate there may be somewhat of a leveling off in 2010, according to a recently released Media Business Report from Jack Myers.com Media Network.

The Myers report predicts a double-digit drop in total ad spending in 2009, following a 4% decline last year. It also projects this decline to continue into 2010, with a 5% dip for the full year, albeit off of a smaller base.

Newspaper advertising will among the hardest hit this year, with a 22.5% decline, on top of a 17% drop last year, the report said. This decline will be surpassed only by an expected drop of 25% in local, regional and spot cable TV ad buying. Other media to be hard hit include print Yellow Pages, terrestrial radio and magazines.

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Among the brightest spots will be video game and mobile advertising, which Myers projects will grow 12% and 9% this year, respectively. Other resilient categories include online video/social networks (8.6%), online search (7%), branded entertainment/product placement (4%) and satellite radio (3%), according to Myers data.

US advertising peaked at $234.7 billion in 2007, up 3% from 2006, according to Reuters. In 2010, domestic ad spending is expected to dip to $187.7 billion.

Myers’ projections are based on fourth quarter 2008 and first quarter 2009 spending, GDP data and a study of the top 100 advertisers by Goldman Sachs, as well as industry analysis, according to a Reuters story on the report.

In related news, Barclay’s Capital revised its previous advertising revenue estimates, forecasting that US ad revenue will drop 13% this year, but improve to a decline of just 1.5% in 2010. Previous estimates called for an ad-revenue decrease of 10% in 2009 and a gain of 1% in 2010.

Comments

[Marcap:]

I believe that in general, the decline of both print and TV/Radio advertising has very little to do with the decline in the economy, but rather it has to do with a complete shift in how companies now select their advertising venues. In fact, one can quite easily argue that when sales are down, companies need to advertise all the more. And in fact many do, just not in traditional ways. Thus I suspect there will very little if any recovery from current levels in 2010 or later.

Most major companies now have online catalogs of their products, easily updated in house or elsewhere, and offering selected products on special weekly. And with ever increasing online databases of clients, companies really have much less need to advertise using traditional methods, as their customers can now very be easily contacted weekly (or even daily) via email, be provided with the latest fliers in living color, and all at only a very tiny fraction of the costs associated with traditional print, TV and radio venues.

Mar 16 06:37 PM