U.S. ad spending has been losing momentum along with the general economy. Of course it's a giant chicken-or-egg question to some extent, but it's axiomatic: As consumers continue to lose confidence in the present and future course of the economy, brand marketers are more apt to go along with their more cautious mood by cutting ad spending — rather than trying to talk consumers out of their funk with more marketing.
So it doesn't come as a huge surprise that WPP's Kantar Media unit finds that ad spending expanded only 2.8 percent in the second quarter compared with 4.4 percent in the first quarter, when there was more hope among advertisers and consumers that a genuine U.S. economic recovery was underway.
Some of the biggest brand advertisers and categories have led the way in slowing growth of outlays, Kantar said, and they may not be finished retrenching yet. "The whole world is nervous — and nervousness usually leads to contraction, both for consumers and advertisers," Bob Jeffrey, chief executive of WPP-owned JWT, told the Wall Street Journal.
If there are further cuts, they'll most likely hurt traditional ad vehicles such as print and direct mail most, while TV advertising and online ads (not to mention video game ads) are expected to be more resilient. There are some big bets being placed by marketers this month on some huge TV properties, for example, including the smashing return of NFL action to the airwaves, as well as the fall primetime season and major launches such as Fox's The X Factor, which will count Pepsi and Chevrolet among its major sponsors.
Many ad execs also hope that any slump is of short duration, more or less in disregard of the general economy, because two traditionally huge advertising vehicles — the U.S. presidential election, and the Summer Olympics — are looming in 2012.
At least healthcare ad spending is on the rise, the New York Times notes, while luxury brands are helping drive digital ad spending. Other categories, meanwhile, have been trying to make lemons out of lemonade by turning one huge economic problem — joblessness — into a new marketing theme.
Amazon, which wants to build new distribution centers in Texas, California and other states where an internet-sales tax has been at issue, has been dangling promises of thousands of jobs as a lobbying tool. And AT&T has been going directly to the American people to sell its proposed acquisition of T-Mobile as a job creator.
And President Obama, of course, is pitching and wooing on behalf of his proposed $447 billion jobs plan. Maybe if they came wrapped in a deal — another area where spending is projected to keep growing — he might stand a better chance...