It was another numbing week of bad news for the telecommunications and media sectors. Lucent announced layoffs of 16,000 employees, overshadowing AOL Time Warner's earlier proclamation that it was severing about 4,500 staffers and that Excite@Home would reduce headcount by 250 people.
Against that dreary backdrop, enter Jack Myers, chief economist and CEO of Myers Mediaenomics, a division of Myers Reports, Inc.
In his latest tome, "Media Recession 2001: Real or Self-Fulfilling?," Myers queried both advertisers and ad agency executives who said their media spending plans over the next year to 18 months were more optimistic than what they were during the economic boon of 1999.
It's an interesting read, as it looks back at key media spending indicators during the last recession in 1991 and attempts to take those indicators to predict what will happen during this present economic slowdown.
This go round, Myers predicts that local media, with the exception of radio, will fare the best. On the other hand, the most vulnerable will be national cable networks, broadcast networks and consumer magazines.
Having said that, the report says that after probing further into the responses, newer media like cable TV and "nascent interactive TV are among the media sectors favored to gain increased spending." Go figure, I can't.
The report does a nice job of explaining the washout in the dot.com sector that maimed so many media outlets last quarter in the scatter market. Basically, the report says that the dot.coms were spending 40 to 80 percent of their investments on advertising to build name awareness rather than building their products, services and customer value. Shame on them.
Myers may be on to something in his rosy media forecast for 2001, especially if you look at other headlines from last week. For example, in its fourth quarter statement, E.W. Scripps-owner of Home & Garden Television, Food Network and Do It Yourself-acknowledged that it, too, saw a sharp decline in dot.com spending in the advertising scatter market. However, the company was predicting an uptick for the first quarter 2001, projecting 20- to 25-percent growth for its three cable networks.
Interestingly, Myers says in this survey that advertisers are more bullish than ad agency executives on media expenditures, and it's the clients, remember, who control the purse strings, not the agencies. So if you look at what the advertisers think, more than half of them said they planned to increase their cable network spending, compared to only 33 percent of the ad agency executives.
Because we are not yet officially in a recession-remember, even though President Bush seems to forget this factoid, that's two consecutive quarters of negative economic growth-it's hard to predict when media, which generally feels the brunt 18 months after the fact, will fare if the economy tanks.
If that does happen, Myers predicts that the media will be hit more swiftly. That's largely because the science of media planning is more precise than it was a decade ago, and that agencies can react to any economic blips quicker. So if there is a recession, media spending could dry up in a quarter or two rather.
Of course, the harbinger that all media look at, automotive spending, is still the single largest advertising category. Myers does address this factor, but not really in depth, reminding us that during the last recession automotive advertising cuts were modest.
Myers says this latest research is a reality check and that the most realistic way to find how advertising executives feel about the economy is to ask them about their spending plans-and indeed those interviewed were bullish.
But let's remember this. Those advertiser executives all have bosses of their own, higher up in the food chain, who are making the calls for slashing budgets, just as they have done with headcounts in this so-so economy.
The full study, which is available for $425, is loaded with data from the last recession-which in itself is a treasure trove. Though this study, like all, is hardly predictive of how the suits in the corner offices will respond to the demands of Wall Street at the end of the day.