It’s been a good 5 years-unless you’re in media

It's been a good 5 years-unless you're in media 1The recession officially ended five years ago last month, and an upturn in ad spending began the following May. But for media, the recovery has been … depressing.
To be sure, U.S. ad spending this year will reach a record $285 billion, estimates Robert J. Coen, senior VP-forecasting at Interpublic Group of Cos.’ Universal McCann.

But factor in inflation, and spending remains below its peak in the 2000 bubble ($290 billion).

More troubling for media sellers (and good news for buyers), media have largely lost the ability to get easy growth by passing along rate hikes well above the level of inflation.

Since 2001, ad spending has grown more slowly than the economy (as measured by nominal-preinflation-gross domestic product) every year except 2004, according to an Advertising Age analysis. That’s a turnabout from recent decades, when ad spending grew faster than nominal GDP in most years except during recessions.

In an October report, Merrill Lynch advertising analyst Lauren Rich Fine said advertising growth now seems to be tracking real, or after-inflation, GDP growth. “This supports our belief,” Ms. Fine wrote, “that media no longer enjoys the benefit of above-average rate inflation, rather the opposite, where increased competition and measurement is putting pressure on rates.”