NEW YORK No doubt about it: There's trouble in adland and it's going to get worse.
Last week, executives from three of the four major advertising holding companies spoke out on the deteriorating ad climate in the fourth quarter and beyond. Publicis Groupe CEO Maurice Levy said his company would focus on the digital sector and high-growth markets to compensate for the sagging economy. Michael Roth, CEO of the Interpublic Group of Cos., in a conference call with financial analysts, acknowledged some delays and cancellations in fourth-quarter project spending and identified two of the softest sectors as financial services and the auto category.
Rino Scanzoni, chief investment officer at WPP's GroupM, warned, overall media spending next year could be flat to down 2-3 percent, with the downturn lasting longer than the dip of 2001.
Here, a snapshot of the spending outlook by media:
While many marketers have not set budgets yet for 2009, some automakers have, and the news isn't good. In recent weeks Nissan told publishers that print budgets for the first three months of '09 would be slashed yet again. Publishers also have been told Land Rover and Jaguar will spend less next year. The trend line is likely to continue through 2009, with carmakers expected to provide less ad support for fewer launches in the months ahead.
The delay in setting budgets doesn't help monthlies with their long lead times, said Charlie Rutman, CEO, MPG North America. "If you've got to commit to January, February closings, it's not happening," he said.
Network TV No severe pullback is seen for first-quarter spending -- so far. Some advertisers have asked for deadline extensions on their first-quarter options, said Kris Magel, senior vp, director of national broadcast, IPG's Initiative. "But a large chunk of those decisions have been made about the first quarter, and the marketplace seems to be holding up so far," he said.
Two sales executives, who spoke on condition of anonymity, estimated that advertisers have cut between 8 percent and 10 percent of their upfront commitments for the first quarter. Auto and financial remain two of the softest categories.
Clients may have a scalpel poised over their media budgets, but thus far, cable nets have yet to feel the cold bite of the steel. With the deadline for many advertisers to exercise first-quarter upfront options having come and gone, sales execs and buyers are saying it's been business as usual in late October.
"I have not seen softness in the marketplace to date and options aren't getting exercised any more than usual," said David Levy, president of Turner Entertainment ad sales and marketing and president of Turner Sports. "But no property is recession proof. There are going to be some challenges."
Despite its reputation for efficiency and trackability, digital media isn't immune to the slowdown, buyers and sellers said. Most clients are trimming rather than slashing budgets entirely, or spending on fewer sites.
The hardest-hit segment will probably be the oversaturated ad-network space, which has already seen companies such as Glam and AdBrite cut jobs; many expect that some will go under. Even some of largest sites said clients are scrutinizing media plans more. Still, many believe the Web will fare far better than TV and print. Said a Microsoft rep: "Many experts believe that traditional ad dollars will continue to shift online."
-with Anthony Crupi, Steve McClellan, Mike Shields and Elaine Wong