Auto Ad Spending to Fall by 9%

(MoneyWatch)  Another day, another grim stat for the advertising industry. Robert Coen, director of forecasting at Interpublic's Magna unit, predicted that ad spending will rise by only two percent this year, down from his 3.7 percent forecast in December. That would make 2008 one of the worst years for the industry in almost two decades.

Among the worst-hit sectors was the faltering auto industry, where Coen sees ad dollars falling by nine percent this year. As The Founder notes over at Tribble Ad Agency, this is absolutely terrible news for traditional media, as auto ad spend is their bread and butter. There have already been signs of the auto industry is pulling ad dollars away from traditional media. General Motors announced in May it would move half of its $3 billion advertising budget online. From the WSJ:

Mr. Coen, who has been issuing twice-yearly forecasts of ad spending for 50 years, predicts that the media outlets worst hit by the slump will be local newspapers and radio stations, both of which are expected to see sharp declines in ad spending. He also cut his prediction for growth in online-display-ad spending, which has been increasing at the expense of traditional outlets like television and print media in recent years, to 12% from the 16.5% in his December forecast.

On a positive note, Mr. Coen believes that despite the slow start to 2008, TV networks should enjoy a better year, helped by the presidential election campaign and the Olympic Games. He is projecting that the four broadcast networks will take in $17.8 billion in ad revenue in 2008, up 7% over 2007, while cable is expected to grow 8% to $22.2 billion.

More worrisome for advertising as a whole, however, is its declining role in the overall economy:

Coen said that ad spending's share of the U.S. Economy was just 2.02 percent in 2007, down 5 percent from 2007, the lowest percentage of share since 1981.