Fri, Dec 12, 2008 - Page 9 News List

Advertising space in newspapers is proving ever harder to fill

By Stuart Elliot  /  NY TIMES NEWS SERVICE , NEW YORK

The bankruptcy filing on Monday by Tribune Co underscored that the brunt of the injuries being suffered by media during the recession are in local markets — especially newspapers.

Already, advertising is bracing for the possibility of the first two consecutive yearly declines in spending since the early days of the Great Depression. The effects of the financial crisis, which exacerbated the woes that have befallen advertisers since the recession began last December, are certainly being felt broadly among TV, magazines, cable and other media.

But newspapers in particular are being hit hard by the slump.

Many executives who spoke at an annual media conference sponsored by UBS in midtown Manhattan released forecasts that predicted across-the-board declines in ad spending next year.

Another sign of how lackluster the results have been for newspapers is that UBS canceled a presentation on newspaper ad spending for Monday, the first morning of the conference. Such presentations had long been a mainstay of the event, formally called the Global Media and Communications Conference. This year’s, which finished on Wednesday, was the 36th annual conference.

For the US, ZenithOptimedia is forecasting a decline in ad spending this year of 3.8 percent compared with last year and a decline of 6.2 percent next year compared with this year.

One reason for the larger decline next year is a slowdown in demand for ad space in newspapers, compared with relatively “robust” demand for commercial time on TV, said Steve King, chief executive at ZenithOptimedia, a unit of the Publicis Groupe.

“We’re in turbulent and challenging times,” he said, resulting in “a sharp downturn in advertising spending.”

King did offer a ray of hope to the ad and media industries.

“It’s not as though everyone has turned off the tap,” he said. “People are still trying to sell goods and services.”

However, a UBS analyst who spoke at the conference, Matthieu Coppet, revised downward his estimates for ad spending. He previously forecast a decline in the US next year of 5.9 percent compared with this year; he changed that to a decline of 8.7 percent, primarily because local advertising could fall by a “double-digit level.”

Coppet is predicting that local ad spending in newspapers this year could fall 9 percent from last year and that it could fall 21 percent next year from this year.

For newspapers in general — local and national ads in the US and other regions around the world — the declines Coppet is forecasting are, he wrote in a report, “the worst in the history” of the medium.

Martin Sorrell, the chief executive of WPP Group, said he believed that an economic recovery would not take hold until 2010.

Although there is likely to be “more pressure in the first half than the second half” of next year, Sorrell said, forecasts of a comeback in the second half were “optimistic.”

“The real world won’t change for the better till 2010,” he added, “when greed has overcome fear yet again.”

Ad spending in the US this year is being “really pulled down by extreme softness in spending at the local level,” according to another speaker at the conference, Robert Coen, senior vice president and forecasting director at Magna in New York, a media services unit of the Interpublic Group of Companies.

He predicted a 16 percent decline in ad spending for local newspapers this year compared with last year. By comparison, Coen is expecting local television ad spending this year to fall 9 percent from 2007; local radio, 8 percent; local yellow pages, 3 percent; and other local media, 0.5 percent.

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