Some Sectors Slow to Return to Advertising

Last week, I blogged about how broadcast and cable TV companies were expecting solid rebounds in Q3 and Q4 this year. Many analysts are hoping the worst of the recession is behind the ad industry. Operators like ZenithOptimedia now predict a 1% growth rate overall this year. Yet, some sectors have been slow to start spending on marketing again.

Jon Swallen, senior vice president of Kantar Media, calls recovery a two-​step process. "Step one is a reversal from declines to increases and the second step for advertisers is to figure out how aggressively do they expand." Pharmaceuticals represent one industry that is taking the return to advertising slowly. In the first part of 2010, this sector’s spending was 2.8% lower than in 2009.  Analysts link the slowdown to a lack of new products and increased regulatory scrutiny. The ad outlook in the travel and tourism sector was also down, by 9.7% in early 2010. And a similar trend has rippled through the movie industry. Analysts say movie producers are showing “greater fiscal responsibility” – a trend that may endure for the long term.

In an indication that conservative ad budgets are here to stay, Rob Jayson, president of strategy for Zenith Media, points to the dearth of long-​term marketing commitments such as 10-​year sports stadium sponsorships. At the same time, retail heavyweight WalMart has signaled that it will be reducing media expenditures. It’s too soon to tell if WalMart’s announcement will result in ad cutbacks by competitors but analysts will be scrutinizing quarterly earnings reports to look for trends.

While there is good news for media companies who rely on marketers who want to advertise, the outlook for 2011 continues to be murky.

[Source: Vranica, Suzanne. “Laggards Amid the Ad Rebound.” Wall Street Journal. 23 Aug. 2010. Web. 7 Sept. 2010] 
Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.