Sobering projections for 2009
Advertising revenues are expected to plateau or decrease during the recession now underway, but one category–local advertising–will take especially heavy hits, according to analysts who released their predictions over the last two months. Their forecasts look plausible, compared with local ad revenue trends over the last three decades. In October, Goldman Sachs analyst Mark Wienkes predicted that next year, total advertising revenues could fall as much as they did in the recession of 2000-2002–implying an overall decline of up to 7% in 2009. Wienkes added that local advertising will suffer larger losses than national, with local TV station advertising falling by as much as 17%. Wienkes also sees declines of 5% to 10% across radio, out-of-home, magazines and newspapers. Radio will also take big hits from collapsing local revenues, which traditionally make up more than two-thirds of its total revenues. For the year-to-date, local revenues are down 8%, and the decline appeared to accelerate in the third quarter, with a 10% drop. Noting that "October was the 18th consecutive negative year-over-year revenue month and 2008 is the eighth straight struggling year," Jim Boyle, a veteran radio analyst with CL King and Associates, issued this grim forecast: "If the recession lasts for all of 2009 and the weakness persists in many of the major radio ad categories, such as auto, to a point where spending severely plunges, then it may be 2010 or beyond before radio revives."
Time to get clever and creative.