Competitive Media Reporting (CMR), which keeps statistics on advertising, reported that spending on ads in the U.S. during the first half of 2002 declined 0.2% from the same period in the previous year. Total spending is estimated at $53.7 billion from January through June. The definition of ad spending covers 12 types of media.
The decline is not as bad as forecasters had been expecting. According to David Peeler, CEO of CMR, “The health of the market is steadily coming back to life.” The biggest gain was for Spanish language TV, which saw ad revenue increase by 26.7%. Most of the major media suffered continuing declines in advertising, including TV syndication -12.6%, national newspapers -6.4%, and magazines -3.7%. Outdoor advertising was down 4.6% in the first six months of the year.
Changes in ad spending vary among media companies. The large companies such as Viacom and Clear Channel tend to have a high percentage of national advertisers. Major national corporations have cut back the most on advertising because they have suffered the most in the current recession. Declining ad revenue has been the most severe in the large markets, including New York, Chicago, and Los Angeles, while smaller markets have fared much better. Many business owners in small cities have continued to spend money on billboards, although this segment of the outdoor advertising business cannot be described as robust. Billboards on major highways in rural areas have maintained relatively high occupancy levels. Advertisers in these areas tend to rely on exposure to highway traffic.
The billboard industry is generally optimistic about a recovery in ad spending, although timing is uncertain. The rebound that was hoped for in the third quarter of 2002 now looks like it will be delayed until at least the fourth quarter and even that may be optimistic. The economy remains weak and there are more dark clouds on the horizon than some forecasters recognize. The tepid recovery to date has depended on consumer spending, which cannot go on much longer. At the end of the 1990’s, consumer saving was at a record low so many Americans do not have much in the way of financial reserves. This is compounded by a $14 trillion loss in stock market values between early 2000 and September 2002. As unemployment rates rise, consumer spending cannot be sustained at a high enough level. In addition, the conventional methods of stimulating the economy have been tried. Tax cuts have already been used and interest rates have been reduced to their lowest level in more than 50 years. New tax cuts and further reductions in interest rates are not likely to boost the economy. Thus, a true economic recovery may not come until late in 2003 or even into 2004.