As the war enters its third week, marketers are becoming increasingly anxious to assess the impact it is having on business. This is a difficult task and the best advice seems to be to sit tight and see what happens in the short term.
According to
Jack Myers Report, upfronts were hot in the early part of the year as a result of positive retail sales growth, house and car sales and employment and consumer confidence. This feeling lasted until February when the US economy went into decline. The issue now at stake is whether further declines are the result of war-inspired uncertainty, or whether other factors are to blame.
Myers has already voiced his opinion that the effect of military action is too often overstated (see Effect Of War On Ad Revenues Is Overstated, Says Myers) and he sees no reason why a short war, which is over by mid-May, should have any lasting impact on the ad economy. However, he acknowledges that there are implications should the war be extended.
“The biggest potential problem for media will be if marketers become concerned that profit commitments will not be achieved. One of the few available budgets that can be accessed to reduce short-term costs is marketing. The end result is an inevitable attack on third and fourth quarter spending,” he said.
As it is, Myers sees no reason to amend his full-year forecast of 2.8% growth in the media economy and he is particularly confident about the prospects for broadcasting (see Myers Is Positive Over US Adspend, 2.8% 2003 Growth Predicted). The response of the marketplace after the war will be crucial but there is no foolproof way of determining this.
“In 1991, the market rebounded quickly after the war, followed by a sustained downturn in the media economy,” says Myers. “But today’s media marketplace is totally different and we cannot depend on historical precedent. The most likely scenario is that the war will begin to wind down in mid to late-April, followed by a period of continued uncertainty. The economy was strong throughout the second half of 2002, and should begin to rebound in April, May and June.
