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Direct Response Marketing

Drop Predicted in Holiday Retail Ad Spending

14 Oct, 2009 Response This Week

WASHINGTON – Due to continued uncertainty in the economy, the National Retail Federation (NRF) predicts a 1-percent decline in total retail sales this holiday season and simultaneously, advertising spending is expected to be flat or down.

The decline is projected to be $437.6 billion – not as steep as last year’s 3.4-percent drop but still significant. The forecast falls below the 10-year average of a 3.4-percent holiday season growth, but is less than the 3-percent decline in annual retail revenue expected for all of 2009. 

“As the global economy continues to recover from the worst economic crisis most retailers have ever seen, Americans will focus primarily on practical gifts and shop on a budget this holiday season,” says NRF’s chief economist Rosalind Wells.

Industry experts and media buyers are saying that there will not be the double-digit declines in ad spending for retailers this holiday season that we saw last year, but that some categories, such as luxury, home, jewelry and electronics, will still pull back.

However, some retailers are shifting marketing money saved from the first half of the fiscal year into the second half.

In the fourth quarter last year, budgets across the top 10 retail advertisers were cut 3.3 percent. Walmart increased spending by 30 percent in Q4, while JCPenney, Kohl’s, Best Buy, Gap, Lowe’s and Home Depot cut measured media spending by double digits, according to TNS Media Intelligence. Macy’s did increase spending by 1 percent and Target’s spending was flat.

Historically, holiday sales increases have slowed in the past five years, and measured media spending among the top 10 have mostly declined – with the exception of 2006 when five-year spending highs at Kohl’s, Best Buy and Gap caused an 8-percent measured media increase.

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