Ad pages down

One of the more interesting, yet subtle, indicators that I use to gauge the mood of the consumer is to check out the thickness of big advertiser heavy magazines. You know, mags like Vogue, Cosmopolitan, GQ, or Details. There are plenty of others, but these magazines are in the business of selling advertising designed to induce needless spending. Have you noticed how thin these rags have gotten in the last two years? When the magazine gets thinner it is because there are far fewer advertisers. Fewer advertisers is the result of consumers not spending money. By my reckoning some A-list magazines are about 60% of the size they were two years ago. Whoa!

As we have been talking about on the blog for some time, there is an important change underway in consumer behavior. A shift toward savings and away from debt. This does not bode well for consumer oriented rags like fashionistas. It also does not bode well for the big media companies like News Corp., Disney, Viacom, or General Electric (NBC Universal) who own most of television. While big advertisers prefer the broad reach of television to print advertising, the expense of television advertising is much higher than that for print. Have you noticed how many of TV’s ads are now of the cheesy “For Only $19.95!” variety? That’s an indication of hemorrhaging at big media. The question is: has the consumer permanently changed his/her spending habits, or is the recession just causing people to temporarily hunker down?

It’s my feeling that we are witnessing a fundamental and permanent shift in how current generations will spend their earnings for the next 20+ years. Assuming that’s true, what will be interesting to pay attention to is how the big media firms will make up the shortfall in advertising spending if the public is less interested in wasting its money on unnecessary crud. I don’t have a guesstimate as to what will unfold, but I will be paying attention. In the meantime, pay attention to the amount of advertising in your favorite rags, as well as the quality of the ads. Lastly, pay attention to how long it takes for the current state of affairs to revert back to the previous state of affairs. This will be very telling, I promise.

Jason