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Advertisers war-sensitive

Feb 17, 2003  •  Post A Comment

Short war, good; long war, bad.
As the all-but-certain conflict looms, that’s the mantra on both Madison Avenue and Wall Street.
Advertising executives facing yet another time of monumental uncertainty are consoling themselves with the hopeful thought that we’ve been here before-a dozen years ago, in fact, in the Gulf War. And it’s to that precedent as well as 9/11 that they look.
If the war is relatively short and bloodless, lasting no more than two months, then there will most likely be a simple “displacement” of advertising dollars from wartime to the postwar period, according to several advertising executives.
As for the ads themselves, the key word is “appropriateness,” said Richard Kirshenbaum, co-chairman of Kirshenbaum Bond & Partners. “What does `appropriate’ mean? If there’s a great tragedy, God forbid, then I think you need to pull … frivolous messages. If it’s a time of solidarity, you may need a message from a company that is showing support. … If it’s in a time of the war ending, then there could be cause for celebration.”
At the end of the Gulf War, one of KB’s clients-Moet & Chandon champagne-had a print ad waiting at The New York Times for the day the war ended. “It was a confetti ad,” Mr. Kirshenbaum recalled. “It was a white piece of paper and it just said in small type, `Please tear up this page in celebration of peace,’ and then it was signed Moet & Chandon.”
In the advertising community, the general tone is “optimistic,” said Greg D’Alba, executive VP, sales & marketing, CNN, although he emphasized that the tone could “change tomorrow.”
“On an annualized bottom line basis, the impact would be relatively slight, which was the case during the Gulf War,” said Sally Shoquist, senior VP, media management, Empower MediaMarketing, Cincinnati. “A short war may even benefit the economy, since some marketers may be stalling on spending new, incremental dollars. … If a resolution in the Middle East comes swiftly, they may then feel comfortable spending those monies.”
The other precedent comforting ad executives as war looms is what they learned after the 9/11 crisis. News and entertainment networks “reported that 75 percent of advertisers were returned to the air after two weeks [following 9/11], with 99 percent back after three weeks,” said Bob Flood, executive VP at Optimedia. The ad revenue lost in September 2001 was replaced in the fourth quarter of that year, Mr. Flood said, “thus increasing demand and tightening inventory” and pushing up subsequent scatter prices.
The expectation at CNN, for example, is that the network will run commercial-free for a “few days,” then “gradually increase to a normal [commercial] break structure,” Mr. D’Alba said.
A list of “sensitive” advertisers has been prepared, he said, that consists of “less than 25 percent” of the network’s advertising clients, among them advertisers from almost all categories but particularly from the travel/tourism, hotel and airline categories, who might not want to be on-air while the fighting rages. Other ad sales executives place automakers, financial services and companies with military connections on that list of war-averse advertisers.
The other hopeful advertising expectation is that the war “most likely will take ad revenue and move it back” later in the year, Mr. D’Alba said. “Depending on the time frame of this war, we will be able to make good all our pre-empted advertisers.”
Those make-goods are widely expected to push already strong current scatter prices even higher, Mr. D’Alba said, expressing a widely held view on Madison Avenue. “You go a few days commercial-free and you obviously tighten up March and into April. Then you’re heading into second quarter, so naturally it will tighten things up a little bit.”
Empower’s Ms. Shoquist predicted a 5 percent increase in advertising revenues for the entire year-if the war is short. “A large-scale war could mean smaller spending increases, perhaps in the 2 percent range, or possibly even flat for the year,” she said.
Of course a “longer, more drawn-out conflict could have far more dire consequences for advertisers, with some categories pulling out for the year,” Ms. Shoquist said. “Certain categories, notably tourism and those associated with the oil industry, would naturally be impacted to a greater degree, no matter what the [war’s] duration.”
The bottom line is that Empower is not recommending that its clients “adjust their schedules or spending levels,” Ms. Shoquist said. And that includes clients with weight in news.
Even a short war could be followed this time by a long military occupation and terrorist attacks in the United States and elsewhere. At this point, it’s that kind of long-term imponderable and not the war itself that makes Madison Avenue, Wall Street and Broadcast Row most nervous.