October has come and gone without any major shocks to the ad marketplace, but if Nissan’s recent spending cuts across media for year-end 2008 and into ’09 are any indication, things could get scarier soon.

Print could feel the brunt of the downturn, with some marketers reportedly cutting print budgets as much as 50 percent. Even digital ad budgets are being trimmed, albeit less so. Sanford Bernstein senior analyst Ali Dibadj said ad spending for many categories will key on commodity costs: “If commodities start giving these companies a [break], they will be able to spend back arguably, maybe not more, but just as much in advertising.”

Rino Scanzoni, chief investment officer at WPP’s GroupM, warned that overall media spending next year could be flat to down 2-3 percent, with the downturn lasting longer than the dip of 2001. “This will take longer to get out of than one or two quarters,” he said.
Here’s a snapshot of the spending outlook by media:

Print

Many marketers still have not yet set budgets for 2009, but some automakers’ agendas have arrived in the form of an early coal in magazines’ stockings. Nissan in recent weeks told publishers that print budgets for the first three months of ’09 would be slashed yet again.
Publishers also have been told Land Rover and Jaguar will spend less next year. The trend line is likely to continue through the year, with car makers expected to provide less ad support for fewer launches in the months ahead.

The delay in setting budgets doesn’t help monthlies with their long lead times, said Charlie Rutman, CEO, MPG North America. “If you’ve got to commit to January, February closings, it’s not happening,” said Rutman.

Among budgets that are being set, the news is mixed. Some clients’ budgets are down 50 percent while others are up 10-15 percent. One buyer said a client was mulling dropping its $7 million print budget altogether. This quarter, ads that started as gatefolds are being reduced to spreads, while spreads are becoming single pages. At least one buyer was trying to preserve print budgets by steering spending to titles’ Web sites.

Network TV

No severe pullback is seen for first-quarter spending—so far. Some advertisers have asked for deadline extensions on their first-quarter options, said Kris Magel, senior vp, director of national broadcast, IPG’s Initiative. “But a large chunk of those decisions have been made about the first quarter,” said Magel, and “the marketplace seems to be holding up so far.”

Two sales executives, who spoke on condition of anonymity, estimated that advertisers have cut between 8 percent and 10 percent of their upfront commitments for first quarter, which is about normal—auto and financial remain two of the softest categories. Retail, packaged goods, fast food and prescription drug categories are said to be “mixed,” with some clients cutting back and others holding firm.

Cable

Clients may have a scalpel poised over their media budgets, but thus far, cable nets have yet to feel the cold bite of the steel. With the deadline for many advertisers to exercise first-quarter upfront options having come and gone, sales execs and buyers are saying that it’s been business as usual in late October.

“I have not seen softness in the marketplace to date and options aren’t getting exercised any more than usual,” said David Levy, president of Turner Entertainment ad sales and marketing and president of Turner Sports. “But no property is recession-proof. There are going to be some challenges.”

The prevailing sentiment holds that the networks have been more forgiving of clients who may have let the deadline slide. “There’s a sense that the networks are much more flexible because it’s not a good time to pressure the client,” said Audrey Siegel, executive vp, director of client services, TargetCast tcm. “But the grace period isn’t indefinite.”

Clients traditionally have exercised 5-10 percent of their upfront options and that pattern has held through Halloween. Said one national TV buyer: “The networks are very nervous about whether there’s going to be a scatter market in first quarter.” Ad sales execs should have a better sense of their prospects for first-half ’09 post-Christmas. But as one sales boss said,
“This is shaping up to be the toughest holiday season in recent memory.” One vanishing category is auto, which per TNS Media Intelligence, reduced its total media spend by 11.2 percent in first-half 2008.

Digital

Despite its reputation for efficiency and trackability, digital media isn’t immune to the slowdown, buyers and sellers said. However, when it comes to the current quarter and beyond, most clients are trimming rather than slashing budgets entirely, or spending on fewer sites, said industry experts.

Online video remains a strong segment, said Danny Fishman, president of Web video ad network BBE. “I don’t think it’s all bad news right now,” he said. “Budgets are more limited, but I’m not really seeing anything get cancelled other than one or two campaigns.”

If any segment is getting hit hardest, it’s probably the oversaturated ad network space, which has already seen companies such as Glam and AdBrite cut jobs—and many expect that some will go under. “Anyone who tells you that digital is immune from the downturn is wrong,” said Michael Cassidy, CEO, Undertone Networks, adding that he hasn’t seen any wholesale bailouts among brands himself.

Even some of largest sites said clients are spending less and scrutinizing media plans more, and most anticipate the competition to intensify. Still, many believe the Web will fare far better than TV and print. Said a Microsoft rep: “Traditional forms of marketing are expected to feel the brunt of the marketing cuts, and many experts believe that traditional ad dollars will continue to shift online.”

—with Anthony Crupi, Steve McClellan, Mike Shields and Elaine Wong.

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