Peter Kafka

Recent Posts by Peter Kafka

Media Execs Get a Little Less Grouchy: Are Ads Creeping Back?

grouchHere’s some non-news: Ad spending dropped dramatically at the end of 2008.

So says ad-tracking firm TNS Media Intelligence, which pegs the slump at 9.2 percent for the last three months of the year, compared to an overall drop of 4.1 percent for all of 2008.

I’m sure that someone, somewhere, will get some benefit from knowing exactly how terrible the ad market was several months ago–we also know, for the record, that ad sales were very bad during the first three months of 2009. But every media person I talk to is consumed with the state of the market right now–and what it might look like six months from now.

The good news: Some of the people I’ve talked to recently actually have good news to report. Or at least, good news as measured by the standards of  the “down six percent–or 20 percent–is the new flat” era.

For instance, execs at big Internet publishers tell me they think the decline in display ad spending may have bottomed out last quarter, which would bode well for restructuring efforts at wounded giants like Yahoo (YHOO) and Time Warner’s AOL (TWX).

Cable executives are even more bullish, and some of them, like Viacom (VIA) CEO Philippe Dauman, will even say so in public: “Signs over the last weeks have been encouraging,” he ventured during the company’s earnings call on Friday.

Let’s be clear: Viacom’s U.S. ad revenue dropped nine percent in the last quarter. So “encouraging signs” doesn’t mean “roaring growth.” And some moribund industries, like the magazine business, are still moribund (and broadcast TV’s day of reckoning is coming this month)

And even this faint optimism may be nothing more than delusion fueled by the stock market’s recent run or the hopes pegged to the notion that people have to start buying cars again, some day. Assuming the recession/depression lasts for another year or so, you can expect the ad market to really recover a good six months after that, since ads are a trailing indicator. But they do have to come back, some day. Right?

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik