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Hurricane Sandy May Cost $500 Million in Media Revenues

7 Nov, 2012 By: Doug McPherson

NEW YORK – Hurricane Sandy not only hammered the New Jersey coast and New York City. It also appears to have dealt a bruising blow to the ad industry and media revenues. Some estimate the cost to be half a billion dollars.

Brian Wieser, media analyst for the Pivotal Research Group, says losses come from pre-empted inventory on local TV and radio programming.

Amid the ruins, there is some good news. Wieser says radio could end up making gains with advertisers, especially those with East Coast listeners with little to no access of other media, such as TV. And another media research group, General Sentiment, says digital media witnessed a surge in activity. For some, that represents a specific value.

When looking at all social media platforms, General Sentiment says the total “Impact Media Value” of the storm tops $80 million. This is the “measure all of the impact the discussion has had online,” says the company. It contends the value of the general social media discussion of Hurricane Sandy on Twitter amounts to nearly $60 million alone. To compare, last year’s Hurricane Irene had a total social media value of $17.8 million, with accounting for just $3.3 million of that total.

Still, the climate for growth among U.S. ad companies was lackluster for the second half of 2012, and insiders say Sandy worsened the outlook.

Ad Age reported last week that major holding companies such as WPP and Publics Groupe cut their growth forecasts. WPP, the biggest ad holding firm in the world by revenue, last week slashed its full-year sales-growth target for the second time in two months as clients in North America and Europe cut spending. That announcement sent its stock down 5.2 percent.

In a new report that cites the impact of the hurricane and other economic variables, Pivotal lowered its U.S. ad forecast to a 0.5-percent decline in the third quarter, a 1.4-percent decline in the fourth quarter and zero growth for the full year.

The projections have been revised down from an earlier forecast of 1.2-percent growth for the third quarter, 0.9-percent growth for the fourth quarter and 1.4-percent growth for the full year.

Wieser writes: “The first signs of a stormy second half of the year for advertising had become clear once the agency holding companies reported, and then … Sandy arrived, making us certain that 2012 will prove to be a year without growth for the U.S. advertising economy.”

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