Still Optimistic About Media Recovery Despite Print Woes

Tech sector and digital advertising leading early sorties against stubborn downturn. A ‘wall of money’ is coming. Stop staring at your feet.


If your business model depends on print advertising, then the first three months of 2009 is a quarter you’ll no doubt try to bury and forget. Magazine ad pages were down 26 percent from the first quarter of 2008 and according to one report in the New York Times, newspaper ad dollars could fall as much as 30 percent in Q1 when those numbers come in.
“The latest Publishers Information Bureau (PIB) data reflect the advertising paralysis triggered by the late 2008 economic meltdown. Marketers froze ad budgets, which affected placement in first quarter magazines,” said Ellen Oppenheim, Executive Vice President & Chief Marketing Officer, Magazine Publishers of America. Advertising page declines were seen in the ad categories most affected by the slowdown: automotive (-47%), finance (-46%) and retail (-34%).” Of the more than 220 magazines tracked by PIB, only 15 posted ad page gains. Of the remaining titles, 75 percent were down significantly, posting double-digit ad page losses. Ouch.

So where are the bright spots?

Technology is one sector that’s poised for a rebound -- both in how it makes things and how it markets those things. For instance, tech companies spent only 23 percent less in print advertising this year than they did in Q1 of 2008’s. While painful, this looks pretty rosy compared to the stinginess of auto, finance and retail advertisers. And unlike those in other industries, tech company marketers are aggressively shifting their budgets to the Web and other emerging media.

“About 15 percent of our spend is on digital,” Beth Comstock, CMO of General Electric told BtoB Magazine this week. “In my mind that is not enough. One of my goals is to increase that spend.” GE is believed to be the first major advertiser to use live streaming video within a banner ad, which it introduced on 10 Web sites last year featuring CEO Jeff Immelt.

Overall, Internet advertising totaled $23.4 billion in 2008, up nearly 11 percent over 2007 according to the Interactive Advertising Bureau and PricewaterhouseCoopers. The IAB’s March Internet Advertising Report showed digital video revenue more than doubling in 2008 to $734 million. One driver of this growth, said IAB’s Jeremy Fain, is that marketers can now take advantage of video without even having video assets. They’re starting to create Web-specific video content instead of repurposing it, and increasingly, they’re including clickable “hot spots” within the video for deeper exploration by the viewer.

Expect to see more video from B2B marketers, particularly from companies with medium to long range sales cycles. Intel CEO, Paul Otellinie said recently that PC sales have reached bottom and he forecasts moderate growth. Intel also said consumer demand remained relatively stronger than corporate demand and demand in US and China is recovering more than it is in Europe, Japan and emerging markets. One area of the computer business that has been relatively strong has been sales of low-cost Internet machines the industry calls mini-notebooks or netbooks. By and large, these devices are being marketed to supplement, not replace, units already on the desktops and travel bags of personal and business users.

Another positive indicator is the health of tech-oriented stock indices, which are in positive territory for the year. Yes we said positive. While the Dow is down more than 10 percent for the year and the S&P 500 down almost eight percent, the Nasdaq Composite is up two percent for the year and the Nasdaq 100 is up more than eight percent. That’s right, up.

Last week, David Resler, a Nomura Securities analyst told the Wall Street Journal: “The data we got today fit into the idea that companies are slashing production at a breakneck rate and that's paring inventories pretty aggressively. Once those inventories are depleted, it doesn't take much to start spurring a little demand," One promising sign last week was a dip in the inventories-to-sales ratio. That is where the signs of recovery or rebound will show up first."
Recessions Spur Innovation

“Recessions have always been incubators for innovation and personal initiative,” wrote Forbes columnist, Richard C. Morais, this week. He points to The Kaufman Foundation’s entrepreneurial activity index, up 15 percent from two years earlier and the fact that 60 percent of recently laid-off workers are considering changing industries or careers – about twice the normal rate.

As Morais’ colleague, Ken Fisher, admonished: “Investors refuse to think a few years out to the resurgence of the economy because they’re busy staring at their feet. This huge bear market has presented huge opportunities. Beyond simple cheapness, we’re on the cusp of the biggest global monetary and fiscal stimulus relative to the world’s GDP in history. There is a wall of money coming. And then a boom!”

Or as comedienne, Lily Tomlin once quipped: “No matter how cynical you get, it is impossible to keep up.”