“Take Two Aspirin And Wait For 2008; Ad Spending Through The First Three Months Contracted At An Even Faster Rate Than We Expected”

And even to do that well means needing a pretty great second half of the year coming in with a 2.3% gain – that’s still down from their original 3.2% second half forecast – but there is really nothing out there to show that’s actually going to happen.

And the cause of this malaise? “Spending through the first three months contracted at an even faster rate than we expected,” according to Jon Swallen, TNS senior vice president and director of research. And the remedy to make the pain go away? “Take two aspirin and wait for 2008,” he advised. Prognosis for the future? “I’m coming up short on even my most pessimistic forecasts.”

We already had pretty good reasons to believe this was going to occur. The Wall Street Journal reported, for instance, a 12.7% decrease in its April advertising followed by a May decrease of 3.4%, hit especially hard by a reduction in auto advertising. With similar stories elsewhere in April and expected for May, it’s fairly obvious that a lot of traditional media are in shell-shock.

ftm background

It Looks Like The Business Side of Newspapers Is Finally Getting Its Act Together, Too
Perhaps the biggest complaint advertisers have against newspapers is how very difficult it is to actually do business with them. In the days of 20% plus margins that didn’t worry publishers so much – the money still rolled in – but today things are different and the business-side now has good reason to get its act together.

The World Cup Brings Advertising Riches To Some, But Not To All
China wasn’t even in the World Cup, and the tournament was held mostly in Chinese morning hours, but its web sites cleaned up big-time with huge advertising profits. For some European countries, the television advertising revenues could benefit by as much as 4%, but in others, including the UK, the World Cup has had a negligible effect on television advertising. And the ratings in the US for some of the games matched major domestic sporting events.

Is There A Correlation Between Internet Advertising Increasing 22% in 2005 While National Newspaper Advertising Dropped 4.7%, And That Some 50 Million Americans Now Turn to the Internet For Their Daily News Fix?
As broadband Internet access increases so will their users turn to the Internet for their daily news requirements, according to significant US research. And since 37% of adult Americans now have broadband compared to 10% four years ago, is it just coincidence that advertising revenue growth for traditional media fell last year while on the Internet it soared 22.3%?

Internet Advertising Soars to New Records on Both Sides of the Atlantic and a European Survey Shows Big Companies See Online Advertising As Critical to Their Campaigns
The percentage figures for online advertising increases this year are truly staggering: Yahoo reports a 46% increase in advertising from last year; The UK, Europe’s largest online market, reports 62% growth; in Poland it is 50% and it’s 35% in Belgium, The Netherlands, and Germany; Italy is expected to grow 18% and the list goes on.

Google’s Sales in 2004 were $3.2 billion. Time-Warner’s Sales Were 13 Times Higher. So, Which of the Two By Stock Market Capitalization is Now the World’s Largest Media Company? Hint: Think Colorful Letters
When Google’s shares hit $290 each this week (they launched at $85 in August, 2004) it propelled the search engine, Internet advertising giant into the world’s most valuable media company. And while the Wall Street bears fear that its bubble could break any time now, the bulls are predicting the shares will surpass $300 each in short order.

Just take a look at the actual Q1 US advertising spend. TNS said it was down 0.3% from the first quarter of 2006 whereby Nielsen’s Monitor Plus had it down 0.6%. The operative word is “down”.

While their numbers differed a bit, their trends were similar. According to Nielsen, national newspapers suffered a year-on-year Q1 drop of 4.9% in ad revenue and local newspapers were down 6.6%, whereby TNS reported a 2.9% drop for national and locals combined. TNS had forecast last December that newspaper advertising would experience an overall dip for the year of 0.9% so something unexpected is definitely going on out there. One traditional media actually did very well – national magazine advertising revenues were up 6.5%.

And how does TNS’ Swollen interpret those Q1 results? “We’re still seeing a strong influx of ad dollars to the Internet and away from media such as newspapers and radio.” Put it all together and it adds up to 2007 being the weakest ad growth year since 2001.

A couple of factors seem to be responsible for the spending cuts. The price of gasoline worries consumers. It could be biting into consumer spending, That in turns means spending uncertainty and advertisers are doing what they usually do in times of uncertainty – they cut back.

And then, of course, there is the Internet. It is still raging forward and there can be no question marketing money is being diverted from traditional media. The Internet is gaining popularity because it has more precise targeting, lower costs and there are more options for small-budget advertisers.

Which brings up another traditional media problem highlighted by JupiterResearch. In a report this week measuring media consumption patterns the research company said that consumers spend 10 times as much time with TV and the Internet as they do with print media such as magazines and newspapers. That’s a problem since newspapers are still getting around three times more ad revenue than does online. That equation may please publishers but maybe that’s a big reason for the downward print advertising spiral for which there is no letup in sight.

And if all that isn’t enough to make a grown newspaper publisher cry, now comes a new survey from Harris that says only 39% of American adults read a newspaper on a daily basis. Seven years ago the figure was 54% but back then online news sites were not like they are today (updated immediately with news not held until the newspaper has shown up on the doorstep).

The Harris survey also showed that 56% of adults go online at least once a day for news and information which could be a reason why newspaper web sites are so popular, indeed the major industry spin these days is that if you add the newspaper print circulation to the web site’s visitors the newspaper’s reach has never been stronger.

It’s a great spin as far as it goes but unfortunately it doesn’t go as far as fixing the bottom line. For the figures are still showing that in spite of the popularity of newspaper web sites and the additional revenues those sites bring in, the losses in print advertising revenue ($700 million – 6.4% -- in Q1 according to the Newspaper Association of America) still far surpasses new online revenue ($137 million). And it is expected to continue that way for a long time to come.

According to Nielsen the largest advertising sector to cut back is the newspaper’s bread and butter advertiser – the local car dealer -- down 20.9% ($242 million) followed by the automobile manufacturers and the Dealer associations that combined spent 14.8% less (down $492 million). Just those two categories alone account for $$734 million of the shortfall. The big villain there is General Motors, down 35.8% from its 2006 spend, mainly reducing its truck advertising.

Another big drop that has hit metropolitan newspapers in particular is from department stores, down $117 million. A lot of that is probably because Federated Department Stores has converted most of its stores to the Macy’s name; thus what might have been two or more different brand names stores in a city may now be just one with just one display buy.

You know, for newspaper publishers dealing with consolidating department stores, their primary auto advertisers cutting way back, running web sites that are popular but not producing the necessary bucks, Craigslist and the others taking huge amounts of the classifieds, perhaps the TNS advice is pretty good: “Take two aspirin”!

“Take Two Aspirin And Wait For 2008; Ad Spending Through The First Three Months Contracted At An Even Faster Rate Than We Expected” – TNS Media Intelligence Research Director

Media Measurement Moves Forward and Everywhere

Further Complicated: Advertising, Children and Television

The State of the Print Media in the World

French National Newspapers
publishers, designs, editors all change, with comments. 40 pages PDF (updated July 2006)

“Take Two Aspirin And Wait For 2008; Ad Spending Through The First Three Months Contracted At An Even Faster Rate Than We Expected” – TNS Media Intelligence Research Director

Media Measurement Moves Forward and Everywhere

Further Complicated: Advertising, Children and Television

The State of the Print Media in the World

French National Newspapers publishers, designs, editors all change, with comments. 40 pages PDF (updated July 2006)

French National Newspapers
publishers, designs, editors all change, with comments. 40 pages PDF (updated July 2006)