The Long View: the advertising industry during hard times - what it means for the publisher and the buyer...

It was a bright sunny day in August 1988 and I was sitting in a poky office booth in the heart of London's Piccadilly.

This was just the second month of my trial period and as an eighteen year old, it was fair to say that I had a lot to learn about traditional media and the advertising industry as a whole.

Following her third caffeine shot of the morning, my boss came into my own private telephone box to tell me there were going to be tough times ahead. We had to work extra hard to get ad sales, and we should make a move now to secure business and win over our competition. This was
the long recession of 1988 - 90 and it would certainly leave its mark.

Just 10 months before, the Dow Jones had taken a 25% hit off its industrial average and this had a dramatic effect on those countries with links to the US. Although I didn't fully understand the global implications, I quickly realised what the bottom line would be. Companies will start to tighten their belts and we had to stay ahead of the game.

As a publisher with a number of academic titles, it was a period of dramatic change in business terms. It was to be an experience that I would never forget.

So, how have things changed twenty years on, and will it be the same story as it was in the late eighties?

A quote from a reputable source in early 2008 said, "Growth in advertising spending in the United States is slowing considerably, according to several forecasters whose predictions are closely followed. But they believe the continuing strength of ad spending online - as well as the stimulative effects of the elections and the Summer Olympics - should keep the industry from suffering a recession in 2008."

Well, it seems that one part of this is very true. Online ad spend continues to grow and it seems to be the media format of choice when things start to get a little tight. In fact traditional media formats like magazines and newspapers have already taken a hit. It is true that Johnston Press and the Trinity Mirror Group recently announced that their total advertising revenues had taken a hit of -23% and -17% compared to 2007.

The fact is that advertising spend is already shifting online from other types of media. In the direct response sector, classifieds are obviously moving from newspapers to services like Monster and Craigslist. It is also true that magazine publishers are looking at ways of supplementing their hard-copy formats by offering extra packages online.

Many analysts now agree that when marketing budgets come under pressure in a stressed economy, those sectors that can best document their connection to ROI, such as lead services, online ads and other search-engine advertising, are far more attractive to corporate chiefs than other kinds of less-trackable traditional advertising.

The predictions for growth in the world of online advertising remain consistent. In fact, ZenithOptimedia reported recently that global web advertising growth would hit $51.1 billion this year, $61.7 billion in 2009, and $75.8 billion in 2010. This is still a significant increase from 2007.

No matter how bad things get, from a relative standpoint, online advertising methods still seem to be more popular than direct mail, yellow pages, newspapers, and the like.

I see the glass as more than half full. There does not seem to be one analyst out there that has predicted a decline in internet advertising, every single one of them is still predicting growth, and in double digits at that. More money is going to be spent online and offerings from websites like the Pro-Talk series seem to be a very good bet in terms of leads, awareness, clicks and in turn a good return on investment.

Andrew Long
October 2008

Andrew Long is the advertising Manager for Laboratorytalk and Processingtalk and also runs and operates a series of consultancy services at http://www.myadbase.com