NEW YORK Hurricane Katrina will go on record as the costliest natural disaster ever to hit the media industry, carving out a projected $1.13 billion in lost ad revenue and other communications spending between August 2005 and September 2006. Factoring in the five other storms that hit the U.S. in 2005, the total losses climb to nearly $1.6 billion, according to an analysis by Stamford, Conn.-based PQ Media, a custom media research firm.
"The only catastrophic event to have a greater impact on media spending than Katrina was the Sept. 11, 2001, terrorist attacks, which were man-made and affected media spending nationwide," said Patrick Quinn, president of PQ Media, which analyzed Katrina's financial impact on 26 different media, including all forms of local and national advertising, marketing services (consumer promotions and direct marketing), consumer media (Internet) and institutional communications (such as trade shows) in 20 affected markets.
Hardest hit was local advertising, estimated to lose $470 million over that span. In the affected markets, the loss represents a 2.4 percent decrease from the annual $19.7 billion spent in the region, according to PQ. National advertising spending is projected to drop by $35.5 million, a 0.2 percent decline.
Local markets, which would have seen advertising increases going into an Olympics and election year, are likely to see decreases. Other than New Orleans, which accounted for 40 percent of all ad losses, several other smaller markets will suffer significant losses.
"It's not the big brands that are cutting spending; it's the local businesses that have shut down and can't advertise. It will take a while for those businesses to get back on their feet," said Leo Kivijarv, PQ's vp and research director, who added that most of the losses occurred in the two to four months after the storms hit.
With media outlets back up and running since early last month, there are increasing signs of recovery. "Most fourth-quarter advertisers have returned to the air; some didn't cancel," said Sue Johenning, executive vp and director of local broadcast for Initiative.
Even though advertising is returning, buying those markets is still problematic, especially without ratings and population figures, which won't be available until sometime in first quarter of 2006. "We don't know who will get the [ad] message," said Dennis McGuire, vp and regional broadcast director for Carat.
When real data will be available is unclear. Nielsen Media Research, which was unable to produce November sweeps ratings for New Orleans, is undecided about February.
"New Orleans isn't in most advertising plans," said Anne Elkins, executive vp and director of local broadcast for MediaCom. "If there is population there, we will spend, but we don't know how to place it. We'll take it quarter to quarter on an as-need basis."