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Ad Industry Braces for ‘Fiscal Cliff’

21 Nov, 2012 By: Doug McPherson

NEW YORK – Some ad industry execs say they see dark clouds on the horizon of 2013 – and one of those clouds holds an ugly storm: the prospects of $607 billion in tax increases and spending cuts.

When compared to 2012, which was buoyed with the Olympics and a record $6 billion in political spending, some believe 2013 is looking downright grim. One cable-TV sales executive acknowledged that the so-called “fiscal cliff” was a major topic of discussion for first-half planning.

Asking for anonymity, the executive told AdAge, “We have the same concerns as any other business about what happens if there’s an abrupt change to the consumer position in the marketplace. It’s a worry for all businesses, especially those in the advertising space. If this happens, we will see a conservative consumer base not spending the money they are spending now.” However, he did add he’s optimistic President Obama and the U.S. Congress will reach a solution short of the cliff.

Nomura Securities media analyst Michael Nathanson told AdAge that aside from digital media and the 2012 Olympics and political spending, the U.S. ad economy has appeared weak most of the year. “We think worries about 2013 ad growth will soon become a concern,” Nathanson said.

Jed Hartman, group publisher for news and business at Time Inc., told AdAge as he’s been speaking with senior executives across the Fortune 500, “It is clear that serious uncertainty in the global markets, highlighted by the fear of the fiscal cliff, has put pressure on marketing budgets across the industry. That’s partly because marketers are making preparations for a ‘what-if’ scenario.”

But AdAge also reports that the world’s two biggest advertisers aren’t sweating – yet.

“Whether we avert the fiscal cliff or go over the fiscal cliff, consumers are still going to be interested in buying detergent and razors and bar soaps,” said P&G Chief Financial Officer Jon Moeller during a media briefing last week. “So we hope this situation gets resolved in a constructive, productive way that both sides agree on, but frankly we’re focused on our job, which is delivering products with superior performance and value, and if we do that well, given our product categories, we should do well. We’re not that exposed to the macroeconomics.”

And Unilever’s CEO, Paul Polman, said his company has been around long enough to weather all storms. “We continue to invest in the U.S. and do well,” he said.

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