Marketers and Publishers Prepare for Wall Street Problems to Hit Madison Ave 3


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By Kyle Austin

There is trepidation on Madison Avenue, which has only grown over the last two weeks. How will Wall Street’s meltdown affect the “Mad Men” of Mad. Ave, along with marketing and publishing offices across the country? Some are downright “grim” on what the meltdown could mean to advertisers and more specifically publishers who are looking to sell ad space.

The first counteraction against the market meltdown for marketers and advertisers? Revise current campaigns to reassure consumers and investors. Suzanne Vranica of the Wall Street Journal chonicled how advertisers acted to revise campaigns to reassure consumers at the onset of the current crisis on September 22nd. She followed that piece on October 2nd by highlighting the next step for advertisers and marketers – attacking competitors with comparison spots. In which, she quoted Jack Trout, president of Trout & Partners, a marketing-strategy firm:

“When hard times hit, the singing, dancing and emotional ads go out the window, and clients say, ‘How do I nail my competitor?”

As marketers and their outside agencies scramble to come up with new messaging to reassure consumers and take jabs at their competitors, many are wondering how the allocation of marketer’s (adjusted) budgets will change. Those changes are beginning to come into focus. A survey put out at the end of last week by Epsilon, a leading marketing service’s firm, found that 65%of 175 U.S. CMO’s and marketing execs surveyed indicated their ad budgets will decrease amid the market crisis. However, 94% of those surveyed also reported that, “A tough economic period is precisely the time when marketing plays a key role.”

Not surprisingly, many are targeting online efforts with their adjusted budgets, which provide real-time measurable return with less investment. In fact, 63% of those surveyed report that their spending on interactive/digital marketing has risen, while 59% report decreasing spend on traditional marketing. The leading digital tactic outlined by the majority of respondents was social computing (including word of mouth, social networking sites, viral advertising, etc.).

With these findings indicating that budgets are shifting online, it would seem that online publishers are positioned to be more recession-proof then their print counterparts. However, Nick Denton appears to be erring on the side of caution with his online Gawker Media empire. Last Friday he announced, via Gawker, that they will be cutting 19 members of his editorial staff and suspending his much-heralded bonus program for post views. In an interview with the New York Time’s Saul Hansell,following the post of his fully-transparent “internal” memo, Denton added:

“Online media companies are going to need every bit of that scale to survive the downturn,” he said. “The niche sites won’t make it.”

Mainstream media companies, are also reassessing their online editorial budgets. Jon Fine at BusinessWeek.com reported on Friday that the WSJ.com was cutting members of its online editorial team. The big “litmus test” for online advertising and media companies will come the week of October 20th, when both Google and Yahoo! release their Q3 findings; outlining how their vaunted ad sales units performed during the market shake-up in Q3.

As for print focused publications? The situation may be more dire. Not only do they have to deal with the general shift of advertising dollars to digital and the loss of ad pages; many regional print publications find themselves battling debt. Last week, Shira Ovide at the Wall Street Journal reported that Minnesota’s Star Tribune had to skip a debt payment as it tried to restructure $430 million in borrowings. The Star Tribune doesn’t find itself alone, as other print-focused publishers (Sam Zell for one) will likely struggle in paying back debt amid rising interest rates (caused by the credit crunch). Even those without debt are taking precautions against the expected decline in ad sales over the next quarter. Ovide also reported last week that Gannett (publisher of the USA Today) made its first move to access $3.9 billion from its credit facilities.


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