Flat Consumer Spending Projections Bring Early Cheer to Advertising

Retail advertising spend was at its lowest point in years last holiday season. This morning's WSJ reports, that "Even before last fall's economic turmoil struck, retailers had been cutting ad budgets … [by] about 6% in 2008 to $17.2 billion." Not so this season. The article states that while "according to both consulting firm Deloitte and research firm Retail Forward … Holiday-season consumer spending this year is forecast to remain flat, … Jon Swallen, senior vice president of research at TNS Media Intelligence [says] We are seeing increases across a large number of retail advertisers [and] … Clearly they are trying to jump-start their sales efforts."

The Journal quotes TNS that "Kmart, Wal-Mart and J.C. Penney have more [than] doubled their ad weight during the first two weeks of October from a year earlier while Home Depot and Lowe's are each up by almost 50%" and further claims that "Wal-Mart Stores, one of the few retailers that continued to increase marketing during the downturn, is also spending 'significantly' more this holiday on advertising".

From showing "stunned U.S. servicemen in the desert … as it begins to snow" to "Best Buy ... employees carol[ing]" and "More Value, More Christmas … [from] Sears" (according to the column), the major theme will be one of continued thrift and deep discounts as major retailers attempt to increase their share of the season's shrunken Christmas pie. How it will all turn out for the retailers is anyone's guess as unemployment continues to rise, but one thing appears certain: The advertising industry and media outlets should have a much better than anticipated Q4.

William Busch

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