Slight ad growth expected for newspapers
Newspaper industry forecasters make their projections
Total newspaper advertising revenue will grow this year from last year's anemic performance, but will lag behind inflation and other media, according to a prominent prognosticator.
Robert J. Coen, senior vice president and forecasting director of the ad agency McCann-Erickson, predicted mostly bad news for newspapers when he gave his annual crystal ball reading at Paine Webber's Media Week, a gathering of analysts who track media companies for investors.
Spending for local advertising -- newspapers' bread and butter -- will rise 2% this year, Coen predicted. That is better than last year's 1% increase, but below anticipated inflation and below the average 3.1% growth in ad spending he predicts for all other local media.
"It's gonna be another bad year for local media spending unless something -- suddenly and very good -- happens soon," Coen said. "We can't really expect much in terms of the future for the newspapers or the other local media under this kind of an economic scenario."
He left open the possibility of a fast turnaround if the economy improves early this year, but said economic trends indicated pessimism.
Coen expected advertising would not "snap back" until 1992, an Olympics and election year, when growth in ad spending would exceed nominal growth in the gross national product.
As with all forecasts, Coen's comes with no guarantees. He admitted his projections last year turned out to be highly optimistic. Coen had predicted that total ad spending would grow 6.2% in 1990 -- actual: 4.9%. He had predicted 6.6% more spending on national print advertising -- actual: 3.6%.
His lackluster predictions for this year follow a year most newspaper executives refer to in pejorative terms. For newspapers, hypersensitive to economic conditions, the recession sprouted in late 1989 and bloomed in 1990. The stalling economy hit newspapers the hardest: Retailers faced bankruptcy and consolidation, and classified advertising for jobs and homes nosedived.
"The major media, in terms of the national budgets, did relatively very well in 1990, compared to the economy and just about everything else," Coen said. "The problem with the advertising industry is . . . the local situation and mainly affects the newspaper, where not only is retail so soft but the plunge in classified help-wanted and real estate has made it a disastrous year."
Classified ad revenue -- which slowed in 1989 to 2.8% growth after three years of double-digit increases--declined 2.1% in 1990, the first decrease in a decade.
For newspapers, local ad revenue for 1990 was $28.9 billion, or 1% above 1989, while national advertising rose 5.5% to $3.9 billion.
Local retailers spent 3.2% more on newspaper advertising in 1990, the slowest growth in at least a decade. Local retail ad spending, which has failed to keep pace with sales growth, "may have just about reached bottom, but the economic outlook doesn't indicate that it's going to go soaring back up" in 1991, Coen said.
Spending for national advertising in newspapers grew 5.5% in 1990, below the 6.7% average for all media.
Advertising as a percent of gross national product continued a three-year decline last year, falling to 2.37%, from 2.38% in 1989.
Total 1990 U.S. ad growth of 4.9% was below the growth in nominal gross national product, while national advertising in all media grew 6.7%, or faster than nominal GNP.
This year Coen predicts slower growth: Average ad revenue gains will be 4.6% -- the slowest in at least seven years -- pushing total U.S. ad expenditures to $136 billion. National advertising will gain 5.7%, local 3.1%.
Coen's predictions assume that the GNP will slow to 4.8% growth this year, from 5.3% in 1990. In constant dollars …