Behind the Forecast Numbers
Earlier this week I went to hear an economist offer his take on the current economy and how soon it would recover. Long story short, I believe the speaker, who had outstanding credentials, was overly optimistic. (I really believe he may have been on vacation on some secluded island for the past year.) In fact, his views were the most positive I have heard or read in the past six months or so. However, he did say a couple of things that I agreed with. One was that television and radio have combined their news and entertainment divisions so that a prime objective of news is now to be entertaining … that is to attract viewers and listeners. Therefore, he said, the media has good reason to say the sky is falling: It brings people in.
Recently, Sharon Begley wrote a column in Newsweek titled “Why Pundits Get Things Wrong.” She quoted a study by a research psychologist at Stanford University who concluded that there was no way to predict the accuracy of anyone’s forecasts. There was no relation to whether the forecaster was a Ph.D., an economist, a political scientist or a journalist or had any other credentials, affiliations or fame. What works for the media, she wrote, are “bold, decisive assertions that make better sound bites; bombast, swagger and certainty make for better TV.”
For more than a dozen years, The Kelsey Group has been predicting the future of the industries we cover. We take the best information we have at the time, talk to industry participants, weigh their views with our own perspectives and make forecasts of the future. We do the best we can to help our clients and the businesses we serve.
The acquisition of The Kelsey Group by BIA resulted in the combination of TKG’s strength in directional media, including all things interactive, with BIA’s strong position in television, radio and newspapers. The benefit of the merger became clear yesterday when the newly formed BIA Advisory Services released a forecast that my colleague Neal Polachek described as “an expanded and more comprehensive view of the U.S. local media sector (by widening our unique understanding) of local media by adding six categories to our forecast.”
It is a little bit unnerving to be offering a new forecast in this difficult economy. Some of the headlines about our forecast said “local ad markets shrinking,” or used terms like “declining” or “downward spiral.” Unfortunately, BIA and TKG analysts do envision local advertising revenues declining from $155.3 billion in 2008 to $144.4 billion in 2013, a negative 1.4 percent CAGR. What is notable, at least to me, is that most of that decline comes from the primarily directional media of newspaper classified advertising and print Yellow Pages. The growth is all in the equally directional Internet Yellow Pages, local search and other interactive digital advertising. There’s just not much share change in traditional direct mail, television, radio, out of home, cable or magazine advertising.
As Harry A. Jessell put it so well in today’s TVNewsday, “the newfangled competition will come, but nobody is in a better position to rule the local online world than TV stations. They have the content, the business contacts and an unmatched ability to promote.” Broadcasters should know that that was the mantra of newspapers 15 years ago. Recognition is the easy part; the hard part is following through and actually making the changes that will help you to compete.
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I’d be surprised to see local print advertising in the form of yellow page directories ever recover. Debating the rate of decline seems like the only safe bet.