Ad market hasn't seen the worst yet
GroupM's Rino Scanzoni says marketplace trails economyNEW YORK -- The nation's biggest media buyer is bearish on the ad market for the time being.
GroupM's Rino Scanzoni said that the ad market was severely challenged locally and challenged nationally. But he said that the marketplace lags the rest of the economy and that it's going to get worse before it gets better.
"I don't think we have seen the worst," Scanzoni said. "As we get through 2009 and into 2010, we'll see a more dramatic contraction." Scanzoni spoke during a breakfast session Tuesday sponsored by the Advertising Club and Discovery Communications in Midtown Manhattan.
Scanzoni said that the marketplace was trailing GDP and consumer spending. GroupM's predictions, he said, are that 2009 would be down significantly -- as much as 4%-4.5%. That will set the tone for the upfront, which will likely be based on what has happened over the past six months not what will happen in the next year.
But he said that the upfront marketplace isn't headed for the kind of severe correction that happened in 2001, when prices fell 40%-50%, because it isn't as imbalanced this time. But he said the media companies that will do well will be the ones that have relied less on three sectors that are particularly hard hit in the recession: auto, financial and retail. And it isn't clear what the impact on the retail sector will be.
Scanzoni said that there will be some marginal growth in sectors like telco, but that it won't offset the weaker categories. And fast food, which has been considered strong, is really just shifting its spend from local media to national media.
"The big question is pharma," Scanzoni said. The pharmaceutical sector has been strong but it remains to be seen what will happen in the future depending on administration policy.
An AT&T executive, Chris Schembri, said that his company believed advertising was essential in their space. He also said that AT&T had looked back at previous recessions to see if there were any kernels of wisdom, but that it was unable to find a magic bullet.
"Staying the course and not trying to flinch, in this economy," Schembri said. "Customers are still spending money, they're not all not spending."
The panel was moderated by Canoe CEO David Verklin, a former president of media buyer Carat, and also featured Anthony Crupi, senior editor of Mediaweek.