ADVERTISING DEPRESSION: It's Here and It's Sustained. Down 2.4% for 2008; -6.7% for 2009; and -2.3% for 2010

Myers Reports revised 2008-2010 Advertising and Marketing Investment Forecasts can be ordered in PDF format at no cost at www.myersreport.com. They are also available for immediate download at http://www.jackmyers.com/commentary/media-spending-forecasts/36159804.html

More than $25 billion in advertising revenues will be drained from media companies between January 2008 and December 2010. Total marketing communications budgets will decline a stunning $56 billion during this same period. Where's the bailout?

While I have been a bear on the 2009 media economy since 2007, I'm joining the chorus of forecasters who are expecting the market to be far more negative than originally anticipated. If current projections hold, advertising revenues will decline for the first time since the 1930s for three consecutive years from 2008 to 2010. And for the first time total marketing communications budgets will also decline, reflecting an overall decline in total marketing budgets for the first time since the great depression. (Myers is the only major forecaster that incorporates 18 media categories including emerging growth media plus six marketing communications categories in our forecasts.)

Marketing expenditures peaked in 2007 at $756.1 billion with 31 percent ($234.3 billion) of that invested in 18 advertising media categories. The additional 69 percent incorporates investments in direct marketing, sales promotion, event marketing, public relations and other below-the-line marketing categories. In 2010, total marketing budgets are forecast to decline 7.5 percent compared to 2007 levels to slightly less than $700 billion. For the first time in modern history, total marketing budgets are declining in 2008, driven by a 2.4 percent drop-off in advertising investments. Myers Reports projects total ad budgets will decline an additional 6.7 percent in 2009, with total marketing communications spending declining 4.1 percent.

While several forecasters believe the national and global economies will recover in 2009 generating ad spending resurgence in 2010, I am not as optimistic. A more realistic long-term economic assessment, recognition that there are systemic issues that are negatively impacting on how marketers are valuing advertising, and a historical context that ad spending lags economic recovery suggests the ad economy is unlikely to recover until 2011 and possibly 2012.

I am therefore projecting a continuing slide in ad spending of 2.3 percent in 2010 with an even steeper 2.6 percent decline in total marketing budgets driven by a shift away from traditional direct marketing and trade promotion spending.

The brunt of the 6.9 percent fall-off in 2009 ad spend will be felt by newspapers (-15.0%), Yellow Pages (-14.0%), consumer magazines (-13.0%), radio (-12.0%), local television (-10.5%), business-to-business and custom publishing (-9.0%), and broadcast network television (-4.0%). Even online media will feel the pain, with projected overall growth of a meager 2.7 percent. Online display ads are forecast to grow only one percent, with search engine marketing increasing 8.0% and online video, search engine, widget advertising increasing at a 25.0% rate to $1.5 billion. Online growth will pick up again in 2010 with overall 8.5% increases.

Jack Myers provides individual corporate economic analyses and forecasts. He can be contacted at jm@jackmyers.com