3-year Decline in Ad Sales Echo of the Great Depression

by Tina Kells | December 29, 2008 at 11:15 am

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It seems like an odd employment litmus test but ad spending is generally seen as a strong indication of pending job losses in a depressed economy. Ad spending has been decreasing since 2007, when the current recession is now said to have begun, and is expected to continue to decline in 2009. This three year ad spending decline has an ominous parallel in history... the last time ad spending went down for three years in a row was during the Great Depression.

The recession officially began in December 2007. But Magna's Bob Coen calculates that U.S. ad spending actually fell in full-year 2007, with bigger drops seen in 2008 and expected in 2009. That would be the first three-year decline since the Great Depression.
Those negatives add up: U.S. spending in 2009 likely will slump to its lowest point since 2003. Factor in inflation, and '09 spending likely will come in well below the level of 2001.

Here’s your obligatory scary stat for the day: The ad recession that’s responsible for so many layoffs has been in effect for two years, by one count, and will extend for at least another year in the U.S. That would mark the first three-year decline in ad spending since the Great Depression.
So says Ad Age, which rooted through the projections made earlier this month by Interpublic (IPG) research czar Bob Coen. That’s a great/grim nugget, because it puts what happened over the past few months–and what will happen in the next few months–in context. So does this table from Coen’s report (click to enlarge):

If you’d like to put even more of a pallor on your week, consider that Coen, like his colleagues at other ad conglomerates, is an optimist compared to prognosticators who work outside the business.