Advertising Second-Half Outlook Is Hazy

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By: Lucia Moses

Publishers may be in for a chilly autumn. The shakiness of the economic recovery and continued sluggishness of help-wanted advertising leaves most analysts cautious. Miles E. Groves, chief economist for the Barry Group consultancy, in July lowered his forecast for a newspaper-ad-spending boost this year to 1.5%, provided there is a “material improvement” in the second half.

Jay T. Zitz, CEO and president of the national ad-rep firm Newspapers First Inc., sees the second half as bringing “slight growth, but not as robust as we originally expected.”

The third quarter has gotten off to a characteristically slow start. Newsprint consumption by dailies was weak in July, although papers apparently stocked up in advance of the announced August price hike of $50 per metric ton. The Newspaper Association of America’s preliminary figures showed the volume of newsprint bought in July increased 3.7%, to 724,000 tons, while usage decreased 1.9%, to 681,000 tons. From June to July, inventories rose to 909,000 tons, a 40-day supply, from 869,000 tons.

Newspapers with a lot of national advertising, however, stand to gain as new drugs, low auto-financing offers, and numerous upcoming movies will continue to drive advertising, Zitz said. “I think in auto, they recognize that newspapers are very effective in moving merchandise,” he said.

Even if consumers rein in their spending, competition for the remaining shoppers will keep print advertisers from retreating, said S. Scott Harding, president of space broker Newspaper Services of America, noting that some of his clients are spending more than planned: “I think the retail — and, as far as I can see, the telecommunications — spending should hold up pretty well in the fall. If you’re going to roll the dice … now’s the time to do that.”

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