B of A Securities Warns of Waning Dept. Store Ads

By: E&P Staff A report issued by Banc of America Securities notes the receding tide of department store ad dollars flowing to newspapers. The category represents 5% of overall revenue. The firm said it sees ?few signs to an end to department store pull-backs? and it believes ?newspapers will continue to have limited visibility over the next several months as department stores look for targeted, measurable advertising opportunities.?

The report quotes several department-store executives about future media spend, including Federated, which just merged with May. The company is putting a lot of marketing dollars into TV as it coverts its stores to the Macy's name. ?'We have also reduced promotions at Bloomingdale's for the third consecutive year, and reinvested unproductive marketing spend into more regular-priced brand advertising,'? Federated said to Banc of America.

The investment bank does note that though the shift of dollars to TV continues, the drop in 2004 department store newspaper ad dollars wasn't as dramatic as in 2003. ?The decline continues nonetheless,? the report said.

Positive trends occurring: Stores like Kohl's, Sears, and JC Penny have increased their newspaper budget (though slightly).

The report said that those companies best positioned to reap more dollars are those with strong online sites, like The New York Times Co., Knight Ridder, Gannett, and Tribune. Smaller, more locally concentrated newspapers also have an advantage because of their brand name recognition and relationships with local advertisers, the report said.


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