By Dan Japhet

As we all know, or should know,  ad spending is largely a function of consumer spending, which is largely a function of consumer confidence. And consumer confidence has been in the toilet going back to the Fall of 2008.

Those events, and the corresponding decline of the economy, probably took 25% of the revenue out of the advertising media market since 2008. Among all media, that’s $500 million in Seattle-area advertising revenue that simply went away. And most mediums have not gotten back to those pre-financial-crisis levels for three years running now.

So, it’s no surprise that media revenue performance in Seattle in 2011 was, as forecast by the media themselves, largely flat. What growth there was came from online digital advertising. Overall, the ad market was up by a total of  only 1.5%, to $2.3 billion dollars. Nationally, advertising revenue was projected to be up by 2.1% to $165 billion in 2011.

As a side note, Seattle is a small media market, relative to market size. Seattle’s share of total U.S. households is 1.6%, but its share of total domestic ad revenue is only 1.4%. The reason for this could be as simple as the fact that our core industries (Boeing, Starbucks, Nordstrom, Amazon and, to some degree, even Microsoft) are not advertising friendly when it come to spending media dollars.

2012, not counting political dollars, will see more by-medium sluggishness. We’ll experience no growth, declines or small growth for most traditional mediums and double-digit growth (13 to 16%) for the online category, including targeted display, online video, Internet yellow pages, newsletters and mobile. Bottom line: growth in the industry (both locally and nationally) will continue to go digital.

Regarding political dollars, as a rule of thumb, 75% of these go to broadcast television, 20% to cable television, 3% to newspapers and 2% to radio. This year, political dollars should hit $38 million in the Seattle market. By comparison, political advertising was only $9 million in 2011 after hitting $47 million in 2010, due to the hot races and issues (Murray/Rossi, privatizing liquor sales and the state income tax, among others).

Major races this year will include the Presidential and Gubernatorial races, Sen. Cantwell’s seat and a new Congressional seat with the creation of District 10, due to the state’s population increase. Issues likely to be on the ballot include legalizing marijuana, transportation and healthcare.

Now, for the outlook, by medium:
Broadcast Television: Local spot TV will be up a modest 1.5% from last year, excluding political dollars. That’s about half of what the broadcast TV folks forecasted for growth in 2011. By the way, placing TV advertising in a major political year is problematic. Local advertisers should be aware of the “political windows” for 2012 (weeks where heavy candidate and issue advertising will be airing) as spot TV and cable TV costs and availability will be significantly impacted during these weeks.

Cable Television: Should be up 3% again, not including political dollars.

Radio: Was down 5.7% last year and is forecast to be down 4.6% this year. National (ads placed from outside the market) was down 9.6% across the country and 1.9 locally.

Newspaper: Was down 5.7% last year and expected to be down 4.6% in 2012. In Seattle last year, newspaper still accounted for more dollars ($449 million) than broadcast and cable TV combined ($377 million). Only direct mail accounted for more total ad dollars ($663 million) than newspaper locally.

Out-Of-Home: Down 4% in 2011 with no growth forecast for 2012.

Local Magazine:  Up 1.9% last year, with a flat 2012 forecast.

Direct Mail: This is the single largest ad category in Seattle, accounting for 29% of local dollars. The category grew by 3% and expected to do the same this year.

Online: This category grew 14% overall, including display 20.7% (includes social media), yellow pages 12.7%, email 46.4% and mobile 73.2%. Total dollars for all of these digital categories is currently only slightly less than radio’s $238 million.

Summary: Two major factors are continuing to impact the traditional media market as we know it. First, we have an anemic national and economic growth rate. And second, more and more ad dollars are going to digital. It’s been a double-whammy  for the industry the past three years.

It’s most definitely a buyers’ market. Competition among the media is fierce. Media buyers should be heads-up about the opportunities that exist for their clients in this environment.

•

Dan Japhet is the principal of Strategic Media Alignment (sma1@japhetmedia.com).