Soon, I suspect we will start calling this economic environment we're in a recession. While overall growth in the second quarter posted a 1.9 per cent annualized increase on top of the first quarter’s 0.9 per cent gain, it sure does feel like a recession. As Fed Chairman Ben Bernanke remarked in mid-July, at the Fed’s semi-annual report on the economy to Congress, all this is-it-or-is-it-not talk is largely academic.
“Whether it’s a technical recession or not,” all the troubles out there now “are putting tremendous pressure on families, he said, adding “I certainly would never make the claim even if we aren’t a technical recession, this isn’t a serious situation.” (More)
Meanwhile, an article in Advertising Age sheds new light on the revenue problems of media companies and portends continued difficulty for all media, especially print. Two big advertisers, Proctor & Gamble and Unilever, both made deep cuts in ad spending last quarter, according to TNS Media Intelligence data, and this has a domino effect on the media companies who’ve been counting on that revenue to keep sinking ships afloat.
The magazine reports that P&G cut spending last quarter by 19.6%.
Not only that, but many of P&G’s biggest global rivals — including Unilever, L’Oréal and Johnson & Johnson — also cut U.S. spending last quarter, according to data from TNS Media Intelligence, though not nearly as sharply or broadly.
The pullbacks come as the marketers grapple with rising commodity costs, big price increases, rising private label sales and consumers who’ve been spending less. Unilever executives last week described the U.S. market as essentially flat.
A newspaper publisher told me a few months back that he was summoned to the office of the largest retailer in his market to be told that they were cutting back on advertising, and I continue to believe that for all the disruptions facing local media, the bigger problem is the economy. Observers continue to hammer at all that’s wrong with media — as well they should — but media’s biggest enemy today is an economy in recession, although nobody in any position of authority seems to have the courage to call it that. Hearst-Argyle CEO David Barrett came close when he told investors that the climate is “recessionary-like” for the ad business, adding that it “feels as bad as it’s been in my business experience.”
John Robinson, editor of the Greensboro News & Record agrees. He told me that the economy is dictating advertising choices, adding that “a recessionary one hurts all media. The explosion of new media, combined with the bad economy and passive, slow-moving newspaper thinking makes for the perfect storm, at least for newspaper companies.” Newspapers, he said, “wouldn’t be sliding nearly as fast as they are if the economy weren’t sliding faster.”
P&G told investors that it had maintained ad spending as a percent of sales for its fiscal year but declined to discuss last quarter. The company is cutting costs in an effort to maintain its margins
