One of the things I've learned from incessantly watching CNBC over the years is how totally wrong most of the pundits have been about the stock market, oil prices, the economy... and well, you name it.
So when this report from FitchRatings came out recently predicting media spending trends for '09, I read it with an ample amount of skepticism. It's not pretty. Fitch notes that five of the top 10 advertising categories (or 40% of ad dollars, according to Ad Age) will be under immense pressure this year.
They also point out that the huge growth of media outlets over the years has created an environment where advertisers will drive hard bargains. But in their look at media sectors, Fitch makes a few predictions that caught my eye.
First, their outlook on print - newspapers and magazines - is very shaky. In fact, they expect several shutdowns, closures, defaults, liquidations, and increased consolidations. Their view on Yellowpages advertising isn't much better.
But then there's the radio discussion. Here's the forecast: "Radio has no unionized workforces, and convert a higher percentage of EBITDA to free cash flow giving them more cushion to endure the secular challenges." While they predict that radio listeners could continue to decrease, they also note that pricing could actually improve. They also see some light at the end of the tunnel with Internet streaming and HD Radio.
And finally, the Internet. Fitch contends that online spending has often been experimental - the type of buy that will likely be eliminated in a tough economy. And as a result, they point to "proven, performance-based media" and here's where a search could be an asset for advertisers.
But the terms "proven, performance-based" are what defines radio. During tough times, advertisers need to be reminded of the successful campaigns of the past that generated brand awareness, customer action, and revenue generation. Too often, we forget the victories, and the activities that got us to the dance. Radio has decades of war stories that can be leveraged during tough times. How did radio help advertisers in past recessions? How can radio become a partner once again as we weather '09 together?
The flight to safety that we all feel every time we open up a brokerage statement is the same type of emotional tug that advertisers feel when they sit down to plan for the new year. Just like financial investors, they are concerned about where to put their money, and where it will have the most effectiveness. Maybe radio is a bit like those guaranteed Treasury bonds or ultra-safe CDs - not the most exciting investments, but sure things nonetheless.