NEW YORK The media marketplace could be mired in a recessionary climate for several years, according to Rino Scanzoni, chief investment officer at WPP's GroupM.
Scanzoni, speaking here on a panel assembled by the International Radio and Television Society, said the downturn would last significantly longer than the dip experienced in 2001.
"This will take longer to get out of than one or two quarters," he said. "It will be a very slow process. We could be going through this in three years." Next year, he said, overall media spending could be down 2-3 percent -- or flat at best.
Scanzoni didn't get much argument from the other industry players on the panel, including Bill Koenigsberg, CEO of Horizon Media; Peggy Green, vice chairman of Publicis Groupe's Zenith Media; and Brian Weiser, svp at Interpublic Group's Magna.
Moderator and media consultant Tom Wolzien noted that the Conference Board's latest survey puts consumer confidence at 35 percent, or "twice as bad as 2001." Much of the problem, said Scanzoni, lies in the fact that American consumers, who have supported the global economy for years with unbridled spending on goods and services, "are tapped out."
Koenigsberg described the current period as "rocky," but insisted that "the sky isn't falling. There was clearly a drop in spending in September and October." But now, he said, "Clients are starting to exhale," as they look toward the first quarter. "It's not happy days again, but there is money out there," he said.
Scanzoni noted two positives. First, commodity prices are dropping -- which eases the pressure on corporate profits. Second, the downturn should foster innovation as buyers, sellers and clients all look for ways to do business more effectively and efficiently.
Green said the downturn should force all sides to work together more "collaboratively." She also said the recession won't impact all product categories and media sectors equally. "Local broadcast will be the most challenged," she said. On the category side, she believes auto spending is likely to remain suppressed "but packaged-goods companies might boost budgets." Overall, media vendors, she said, would be forced to "look beyond the easy money."
Cable networks are somewhat better positioned to weather the storm than their broadcast counterparts, Scanzoni said. The broadcast nets will likely experience declines in spending next year as audience erosion continues. Cable growth will slow but it will continue -- perhaps in the low to mid single-digit range, he said.
Why is the outlook better for cable? For one thing, the medium is filled with niche networks that offer more precise targeting opportunities, said Scanzoni. Also, cable has invested significantly more in original programming in recent years, which has help boost audiences, said Koenigsberg.
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