No Sign of Ad Recovery – Merrill Lynch

28 November 2001

The US ad industry may not yet have hit the bottom of its current slump, Merrill Lynch has warned, with falls in ad revenue becoming steeper in recent weeks.

Blaming a “hangover” from September 11 for continued declines in adspend, ML analyst Lauren Fine revealed “A certain amount of paralysis still exists.” Although TV networks have witnessed a rise in demand for ad time recently, Fine pointed out that business is still well below this summer’s levels.

The firm estimates that newspaper ad revenue tumbled 11.5% in October, worse than September’s 9.5%, largely due to a fall-off in classified advertising, with help-wanted ads 40%–50% down at some papers during October and early November.

Broadcasters are also suffering. Local TV stations are expected by ML to see a 15%–20% year-on-year drop in ad revenue for November and December, with radio advertising predicted to be 10% down in December.

In an informal survey of fifteen major marketers conducted by ML, one-third said they would raise adspend next year, another third said they would keep marketing expenditure flat, while the final third said they would cut it by 10%.

News source: Wall Street Journal