War Fears Hold Back US Ad Recovery

11 March 2003

Anecdotal evidence from the States confirms that the threat of war in Iraq is holding back the ad recovery.

Media buyers and industry observers have noticed advertisers holding back spend until the crisis is over, or drawing up contingency plans to withdraw advertising as soon as the bombs start to fall.

“We have noticed a definite hesitancy on the part of advertisers and media buyers in terms of going ahead with full-fledged new initiatives,” declared CIBC World Markets analyst David B Doft.

Some advertisers, such as Gucci and Merrill Lynch, have told agencies they are mulling cuts in adspend before war is even declared. Others, such as American Express, Boeing and Northrop Grumman, are planning to pull their ads once battle commences.

“Why make a decision to go ahead with launching a new campaign or a new product when you can wait a couple of months and play it safe?” Doft continued. “The caution comes from not wanting your ads to show up on TV next to dead bodies.”

Such sentiments were echoed by Michael Drexler, ceo of Optimedia International in New York. “Most of our clients are resigned to the prospect of war” he declared. “They plan to hold off advertising during the initial phase of any attack and see how it plays out.”

Cutbacks are hitting radio, local TV stations, monthly magazines and newspapers the hardest. However, should war break out, ad revenues are likely to tumble at broadcast and cable networks as coverage of the conflict swallows advertising slots.

Nevertheless, some industry executives are more bullish about ad prospects, assuming conflict concludes quickly. “If there's a four-to-six-week war,” predicted Steve Lanzano, North American ceo of Mediaedge:CIA, “ad spending could really pick up in the second half of the year.”

Data sourced from: New York Times; additional content by WARC staff