Ad Revenues: Bad News Coming?

Research by Deutsche Bank has led to a prediction of another major economic crisis that will hit ad agencies and impact ad revenues in 2012.  While they felt it was too early to tell whether the result will be a slowdown or full "double-dip" recession, they predict either will dampen prospects for the U.S. and global advertising economy.   As a result, the firm is downgrading its earlier projections of 5-6% basic growth for ad agency stocks prices to 1-2% growth rates.  The analysts' report concluded that:

"Ad spending has not fully recovered from 2008-09 lows so our assumption is that if there is a downturn, it will not be as severe as 2009, ... Agencies have stronger balance sheets now (as do the major brand owners who pay them), and industry headcount has not been rebuilt to previous peak levels."

Total ad revenues for U.S. media, particularly broadcasting, is likely to still show growth in late 2011 and 2012, as the industry expects record levels of political advertising expenditures on top of normal advertising demand.

Source: "Wall Street Downgrades Madison Avenue: Major Impact of Economic Turmoil Will Be On 2012 As Budgets", Media Daily News