By: Joe Nicholson Miles E. Groves Pares Prediction For 2001 Newspaper Ad Growth
Newspaper advertising this year will grow by 3.2% - a lot less than
newspaper forecaster Miles E. Groves' original prediction of 5.1% growth three
months ago.
Groves' revised forecast, if it turns out to be on target, will mean a decrease
of more than $1 billion in newspaper ad revenue, to $50.2 billion from $51.3
billion, from his original prediction. Groves' downward revision was based
primarily on the poor performance of the U.S. economy as well as an informal e-
mail survey of more than 50 newspaper executives, said Groves, chief operating
officer and chief economist of The Barry Group, a Bethesda, Md.-based newspaper
consulting firm.
National papers get the lion's share of national advertising, and Groves
forecasts national advertising will grow a respectable 8.4% this year. Small and
midsize papers, which depend overwhelmingly on retail and classified
advertising, face bigger hurdles, said Groves, who predicts classified will grow
only 4.4% this year and retail advertising will advance an almost miniscule
0.3%.
"Retail is a tragic story," said Groves, who cited recent retail chain
contractions and contended that sagging consumer confidence will lead to reduced
purchases.
However, despite Groves' downward revisions, he pointed out that he was
forecasting reduced growth, not a drop in ad revenue. "Fundamentally, I don't
believe the economy is sick. I don't believe we are going to have a recession,"
said Groves, who predicted real gross domestic product (GDP) this year will grow
2.5%. Groves estimated last year's real GDP was 5%.
That doesn't leave much of a margin of comfort for newspapers because the
industry - as well as some other industries dependent on advertising -
could slip into their own recession if the economy's real GDP declines to 2% or
below.
Groves said his revised predictions will appear in his free quarterly e-mail
newsletter "Economic Notes," which can be obtained by e-mailing Groves at tveblen@aol.com.
Joe Nicholson (jnicholson@editorandpublisher.com) is an associate editor covering marketing and advertising for E&P.
Copyright 2001, Editor & Publisher.
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