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Going Negative

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Retail ad spending is down 6 percent through June, a reflection of slack consumer demand, agency executives said. And the sector is likely to get very little help from this year's holiday season, normally the category's biggest sales period. TNS Retail Forward is predicting holiday sales growth in 2008 of just 1.5 percent, the weakest gain since 1991, when sales climbed an anemic 1.2 percent.

"The holiday sales forecast represents a weakening from modest third-quarter growth as the boost from tax rebates runs out," said Frank Badillo, senior economist at TNS Retail Forward. "The benefit from a letup in gasoline prices will be overwhelmed by the impact of rising unemployment, tighter credit and other hardships on households. And unfortunately, the trends in economic conditions offer no sign of an impending recovery."

Pharmaceutical spending was down 5 percent during the first half, to $2.6 billion, and movie-studio spending was down 5 percent to $1.7 billion.

But some advertisers expect to weather the storm relatively unscathed. "Companies that make everyday products are less vulnerable to a down economy," said Laura Klauberg, svp of global media at Unilever. "We're feeling it a little less."

The latest available TNS figures show Unilever's ad spend up 3 percent this year.

While traditional media aren't going away anytime soon, agency executives say clients will continue to shift significant resources over the next year to digital platforms -- first and foremost, to paid search, spending on which eMarketer projects will climb 18 percent this year to $10.4 billion and another 14 percent next year to $11.9 billion.

ROI-focused media such as direct response and in-store will also see gains, executives say, as clients seek ways to maximize return on every marketing dollar.

"Search is huge," said MPG's Lanzano. "Those are people raising their hand and saying, 'I want to take a look at you.'"

Lanzano said another big growth area is behavioral targeting, where marketers try to profile consumers based on media consumption and purchase habits.

Another promising area in the down economy, said Lanzano, is barter advertising, where clients exchange unsold goods for media time. Specialists in the field include independent Active International, Omnicom's Icon and Aegis Group's Carat Trade. "Barter will definitely play a bigger role," Lanzano said. "CFOs love it because underperforming assets can be written off at full value and exchanged for media."

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