The economy’s impact on media can’t be overstated

An article in Advertising Age sheds new light on the revenue problems of media companies and portends continued difficulty for all media, especially print. Two big advertisers, Proctor & Gamble and Unilever, have both announced deep cuts in ad spending, and this will have a domino effect on the media companies who’ve been counting on that revenue to keep sinking ships afloat.

The magazine reports that P&G cut spending last quarter by 19.6%.

Not only that, but many of P&G’s biggest global rivals — including Unilever, L’Oréal and Johnson & Johnson — also cut U.S. spending last quarter, according to data from TNS Media Intelligence, though not nearly as sharply or broadly.

The pullbacks come as the marketers grapple with rising commodity costs, big price increases, rising private label sales and consumers who’ve been spending less. Unilever executives last week described the U.S. market as essentially flat.

A newspaper publisher told me a few months back that he was summoned to the office of the largest retailer in his market to be told that they were cutting back on advertising, and I continue to believe that for all the disruptions facing local media, the bigger problem is the economy. Observers continue to hammer at all that’s wrong with media — as well they should — but media’s biggest enemy today is an economy in recession, although nobody in any position of authority has the balls to call it that.

UPDATE: Hearts-Argyle CEO David Barrett told investors that the climate is “recessionary-like” for the ad business, adding that it “feels as bad as it’s been in my business experience.”

Comments

  1. You are exactly right. The economy is dictating advertising choices and a recessionary one hurts all media. The explosion of new media, combined with the bad economy and passive, slow-moving newspaper thinking makes for the perfect storm, at least for newspaper companies.

    But newspapers wouldn’t be sliding nearly as fast as they are if the economy weren’t sliding faster.

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