INSIGHTanalysis: War And The Ad Economy
Analysts are still unsure as to the impact that the looming conflict in the Middle East will have on the advertising world. Contrasting pronouncements allied to a ‘wait and see’ mentality have only muddied the waters and it is this general sense of uncertainty which is acting as a restraint on growth.
However, there can be little doubt that the threat of military conflict has forced many companies to take stock and postpone media buying decisions. A recent poll carried out by MediaPost and InsightExpress found that a majority of media planners were of the opinion that a war would adversely affect their budgets.
Extent of the threat Nonetheless, as Jack Myers has already pointed out, a brief conflict where there is little collateral damage to the economy could actually be beneficial to the advertising sector (see War May Not Hurt US Adspend In Short-Term, Claims Myers). For example, if consumer spending were to decline, companies may feel the need to advertise aggressively in order to capture a greater share of the available market. Similarly following a short war, marketers who had seen revenues fall would be pressured into spending heartily to make up for lost business.
There is a danger, with blanket coverage set to hit our screens, of the effect of the war being overstated. With this in mind, it is hardly reckless to take at face value forecasts made before this crisis which took into account other factors at hand (see US Advertising Growth Comparisons From eMarketer). CMR is predicting 3.3% ad growth in the US this year while Merrill Lynch foresees 4.0% and Universal McCann plumps for 5.0%.
The situation is summed up by David Hallerman of eMarketer who commented: “Mixed messages might be appropriate for the current state of affairs. Much appears unknown, in world politics and advertising alike. And yet countervailing forces – such as the decades-low mortgage rates, which have sustained refinancing – contribute to continued cash flow and sufficient spending among consumers. And as long as consumers spend, companies advertise.”