Internet Will Lead Advertising Sector Back

The advertising industry, hammered as bad as any by the U.S. recession, got another positive forecast for 2002, this time from CMR.

CMR predicts a 1.5 percent rise in overall ad spending for 2002, up to $96.1 billion from an estimated $94.6 billion in 2001. And leading the way for this growth will be Internet advertising, which CMR forecasts will grow 8.8 percent over its 2001 total. The newspaper category, the next best in terms of forecasted growth, is expected to grow 3.1 percent.

While still just a forecast, the numbers are welcome news for an industry that took the brunt of the recession and saw several advertising-supported publications both online and in print disappear from the scene.

“Looking back on 2001, the advertising industry felt the adverse effects of a souring economy, which took ad spending into the greatest slump we’ve seen in years,” said David Peeler, president and CEO of CMR. “The events of September 11 coupled with the state of our economy certainly accelerated advertising’s continued decline for the remainder of the year. As our nation emerges from recession, we believe the worst is behind us and expect to see a slight industry rebound by the onset of the third quarter of 2002.”

Not only was 2001 much weaker than expected, but it came on the heels of 2000, a year in which total ad spending across all media was $104.5 billion, according to CMR. Estimates by CMR indicate that full-year ad spending for 2001 will be down 9.4 percent to $94.6 percent — far and away the worst year-over-year showing since the last U.S. recession.

“One has to look back to the 1990-1991 recession to find a comparable year-over-year showing within the past 10 years,” Peeler said.

Any potential recovery in 2002 will take some time. The good news is there are Winter Olympics in 2002, and while it’s not a presidential election year, there will be local races in November that should boost local media spending. CMR expects ad spending to remain soft through the first half of 2002, with a modest rebound relative to the second half of 2001 beginning with the third quarter.

Media analyst Jack Myers did predict 10 percent growth for the online advertising market to about $4.73 billion in 2002, but that prediction was made before Sept. 11. Myers went on to predict 12 percent, 15 percent and 20 percent annual growth during the next three years.