Where Is Ad Spending Headed?

• Posted: Wednesday, May 07, 2008
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• Author: pradhana
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• Filed under: Ad Spending

Moderate growth is still growth.

The economic slowdown will eventually take its toll on total US media ad spending, but not in the immediate future. Spending increases in 2008 across all media will bounce back from last year’s flat growth to a 3.3% gain. Much of those increases will be in TV advertising, especially with the national election and the summer Olympics.

Even then, the retail, financial services and automotive industries, three large sectors for TV advertising, are already feeling the economic downturn. As Sarah Fay, the CEO of Aegis’s Carat, said in a recent interview with Advertising Age, “When there is a recession, marketers often feel the pressure to work with efficient forms of TV buying, so they are really starting to look hard at the Long Tail of TV or having cable play a bigger role.”

Furthermore, ad spending cutbacks could be expected to trail the start of any full-blown recession for three related reasons:

1. Companies usually commit ad budgets in advance.
2. Companies do not want to slash advertising and decrease their sales until it is clear that consumer spending is going to be less responsive to advertising.
3. Companies are not likely to greatly alter their ad budgets until they feel the effects of decreased revenues.

However, the economic slowdown has been anticipated for many months. That has put a conservative slant on many ad budgets, which is why—even with elections and the Olympics—total ad spending growth this year will still be moderate.

Read more - eMarketer

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