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What, Me Worry?
According to Competitive Media Reporting, ad volume across 11 major news media grew by 8.3 percent in 1998 compared to the year before--not bad for a mature industry during a period of low inflation. The outdoor medium showed the greatest increase, at 18 percent, but this may, in part, reflect a better system for measuring this chronically overlooked and undermeasured medium. Network radio was the only major to decline. As good as the year was, the latest data contain cause for caution. Of the 11 media, only three--Sunday magazines, cable TV and national spot radio--had higher growth rates in the year's wrap-up period than they did for the year as a whole. In short, at least according to these data, the U.S. ad industry's growth is slowing. Investors, who have bid most of the public-company ad stocks up to historic highs, either don't know or aren't worried about it. That's reasonable. The major companies are pretty well diversified into nonmedia-based operations and do business broadly over the globe. A slowdown in U.S. media advertising might not crimp profits at all. --Alan Gottesman (westendal pobox.com) is principal of West End Consulting.
THE GOTTESMAN FILE
All but three media posted lower growth rates in 1998's fourth quarter than they did for the year as a whole.
4th quarter Year
Magazines 7.1% 8.5%
Sunday magazines 4.0% 1.3%
Newspapers 6.3% 8.0%
National newspapers 1.0% 4.7%
Outdoor 7.5% 18.0%
Network TV 2.5% 6.9%
Spot TV 6.1% 6.6%
Syndicated TV 2.0% 7.0%
Cable TV 15.5% 15.4%
Network radio -11.0% -4.8%
National spot radio 22.4% 21.1%
Total 6.2% 8.3%
Sources: Competitive Media Reporting, West End Research