Magazine Advertising Down 2.9%

Magazine advertising revenue fell by 2.9% to $8 billion during the first half of the year, dragged down by weakness in the technology, financial and media sectors.

The half-year figures released Tuesday by the Publishers Information Bureau provide yet another measure of a deep industrywide advertising slump.

Although seven of the 12 major magazine advertising categories registered gains during the first half of 2001, advertising by technology companies, retailers, media firms, financial and real estate advertisers fell noticeably.

However, Ellen Oppenheim, executive vice president of the Magazine Publishers of America, claimed a moral victory: “Given the overall economic climate, we are pleased that the first half of 2001 closed with only a slight decline in revenue compared to last year.”

The first-half drop in advertising spending reflects a sluggish advertising environment that began to surface during the fourth quarter of 2000. Most publishers began the year hoping that the second half would bring a rebound.

But a string of advertising industry observers has steadily been ratcheting down rosier estimates issued earlier in the year.

The consensus is that 2001 will mark the first year-to-year overall advertising decline since 1991, when advertising fell by 1.6% in the midst of a recession.

Overall advertising during the first quarter fell by 5.2% to $22.6 billion from $23.7 billion during the first quarter of 2000, according to a recent report by media-tracking firm CMR Inc.

Lehman Bros. analyst Kevin Sullivan on Tuesday revised a report calling for 2% growth in overall advertising with a prediction of a 0.3% drop in overall ad spending. The drop would be “only the second decline in the past 40 years,” according to Sullivan.

Sullivan predicts a 5% increase for cable television and a 1% increase for radio. But Sullivan predicts a down year for newspapers (-2.5%), magazines (-3.0%) and broadcast television (-3.0%).

Robert J. Coen, considered by many in the media industry to be the leading predictor of ad spending, in June cut his estimate to 2.5% growth from a much-rosier 6.5% estimate issued earlier in the year.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Advertising Spending

Five of the 12 advertising categories that make up 85% of magazine advertising fell during the first half of 2001.

Category Year-over-year % change Toiletries/cosmetics +23.3 Drugs/remedies +13.3 Apparel/accessories +10.5 Transportation/hotels/resorts +9.0 Food/food products +6.9 Direct response companies +3.3 Home furnishings/supplies +0.6 Financial/insurance/real estate -11.3 Automotive -2.3 Media/advertising -16 Technology -19.5 Retail -24.2 Source: Publishers Information Bureau