Advertising Recession!!!!

As reported by Joshua Chaffin in the Financial Times and picked up by Drudge Report, advertisers and marketers appear to have a recession all to our own.  According to Chaffin:

Advertising weakness is spreading from newspaper and radio groups to the rest of the media and casting a shadow over a year that was supposed to benefit from the Beijing Olympics and a high-spending election season, analysts warn.

The biggest threat to the industry from big advertisers such as car dealers, banks, retailers and airlines, among others, as they tighten their belts.

However, the quote in the story that struck me most came from LARRY HAVERTY, portfolio manager at GAMCO Investors,

What we’ve got here is a recession in advertising. It started in local media – radio and newspapers – and is now spreading to TV.

With dramatic alarmist talk aside, it’s important to understand that advertising is always going to take some type of hit when an economy weakens.  Banks and car companies usually look to make sure salaries are paid and other expenses are taken care of in a time when profits margins thin.  This movement of resources normally results in a slashed marketing budget. 

Calling this a recession in advertising is an eye grabber, but it’s wholly not accurate – a recession is a recession period, and it hits everyone.  Marketers normally don’t feel a separate recession from the one that already exists in the economy at large.

With that said, I do point out that Chaffin does address an important issue – the digital effect on traditional media.  While the contributors to the story claim digital’s impact is minor, and I don’t disagree, I do believe that recessions and economic shakeups tend to have a re-aligning effect on a lot of industries.

The one very important thing associated with recessions are natural market corrections and re-alignments in major industries.  In advertising, slashed budgets and big shakeups will hopefully cause many to think differently about ad campaigns.  Perhaps, we will see smarter campaigns that encompass alternative methods and channels for delivery.  That’s OK.  It makes an industry healthier and stronger when it’s forced to survive and be successful.

Hopefully, a new era in advertising, which was born in the tech bubble, will be pushed forward out of this potential re-alignment.  

US political marketers and advertisers know this concept very well.  We look to the large multimillion dollar corporate budgets with awe.  We also laugh when we see the same budgets spent so poorly.  Political advertisers learned a long time ago how to advertise and market smartly and effectively on shoe-string budgets.  It will be fun to see the corporate world operate in a pinch.

This entry was posted by Brian Donahue on Monday, July 28th, 2008 at 9:43 am and is filed under Discussions. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.