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Commercial Communications Slowing Down

By | June 11, 2006 12:31 pm

The life-blood of commercial communications in America seems to be slowing its pump-rate. I mean of course advertising. In the first quarter of 2006 advertising expenditure nationwide has barely kept pace with overall national economic growth. Doesn’t sound so too bad, does it? Until you recognize that spending on advertisements has conventionally been much higher than the country’s Gross Domestic Product. And that’s disconcerting close watchers of media economics.

The ad-spending tracking company TNS Media Intelligence had at one point been forecasting a 5.5 percent rate of expansion for U.S. ad spending from January through March 2006, but it actually came in at 5.2 percent – chiming eerily with the GDP.  Now it so happens that the GDP is itself up a little on many economists’ predictions, but even so the comparative slump in advertising dollars is worrisome. TNS’s President and CEO Steven Fredericks told MediaDaily News: “We’ll be very interested to see what happens in the second quarter.” He also speculated, perhaps more in hope than certainty, that “right now it looks like it might be an aberration.”

Meanwhile, nestling deep within overall national statistics, one particular media sector that has been prone to more worry perhaps than any other – the newspaper industry – is actually doing better than expected. But print workers shouldn’t break out the bunting too soon. The improvement lies with those newspapers who have wholeheartedly developed a web-presence, and along with that aggressively pursued online advertising.

Preliminary estimates from the Newspaper Association of America indicate that advertising expenditures for newspaper Web sites increased by 34.9 percent to $613 million in the first quarter of 2006 compared with 2005. Print and online expenditures together totaled $11.1 billion in that quarter, meaning a 1.8 percent year-over-year increase. Not too disastrous, I would say, for a supposedly dying dinosaur.

Chief wrangler of the dinosaurs (if I can so call him) is John Sturm, President and CEO of the NAA, and he says “Newspaper publishers are winning on the Web, and their efforts to attract visitors, build leading Internet properties and monetize their online investments are being recognized by advertisers and consumers.”

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