- The Washington Times - Wednesday, March 21, 2001

Ad sales are sluggish at U.S. television stations and newspaper companies as the slowing economy trickles down to advertisers' marketing budgets the first item to go in times of financial troubles.

Companies searching for alternatives to compensate for lost sales are turning to the easiest way they know how to cut expenses.

"They look at the ad budget and see that's where they can get some leverage," said Doug Laughlin, president of Laughlin, Marinaccio & Owens (LM&O;), an advertising agency in Arlington.

Many Washington area ad agencies say they aren't feeling the pinch, as clients like Choice Hotels International are still willing to spend millions of dollars to get their messages across.

Some, however, are suffering as clients slash ad budgets. In January, the Martin Agency in Richmond laid off 40 persons, giving the company 375 employees.

"It happened because of a slowdown of spending of our clients across the board," said company spokesman Dean Jarrett.

Agencies in San Francisco and Boston also are laying off employees to compensate for clients' smaller budgets.

Companies are chopping their advertising budgets because it's usually "a big expense that you can cut readily and goes directly to the bottom line," said O. Burtch Drake, president and chief executive at the American Association of Advertising Agencies in New York.

While overall advertising in U.S. media rose 1 percent in December, ad sales dropped 12.2 percent at cable television networks and 14.3 percent at the three biggest newspapers, according to a study by Competitive Media Reporting, a New York-based company that tracks ad spending in U.S. media.

Double-digit growth in each of the first three quarters of 2000 slowed to a 6.1 percent increase in the fourth quarter, the report said. The slowdown continues into 2001.

Gannett Co., the largest U.S. newspaper publisher, said advertising sales at its papers fell 4 percent in February, including a 19 percent drop at its flagship newspaper, USA Today. The company sold fewer ads, which make up more than two-thirds of its revenue, for two months in a row.

Ad officials say the industry is feeling the aftermath of the dot-com explosion, when dozens of upstart companies were willing to spend big bucks for name recognition only to close shop a year later.

The Super Bowl in January 2000 showcased 17 dot-com companies for $2.2 million per 30-second spot. Three of those companies including Pets.com are no longer in business.

This year, three dot-com firms Monster.com, HotJobs.com and ETrade dished out $2.3 million per 30-second ad during the Super Bowl.

Mr. Jarrett said the Martin Agency had expected to handle $200 million worth of billings for dot-com companies over the past 18 months but received about $70 million in billings.

Those dot-com companies took up a lot of inventory on television and print and now "there aren't as many people paying as much money to place ads," said Tina Bagapor-O'Harrow, president of the Ad Store in the District.

Now space is available and media outlets are looking to fill it.

"I'm being tougher negotiating [prices with media] because I can be," Ms. Bagapor-O'Harrow said.

The Ad Store, which works with clients on a project-to-project basis, is buying radio time for national campaigns for Econo Lodge and NASCAR. Ms. Bagapor-O'Harrow said the agency is buying 12 percent to 15 percent more than it could a year ago.

The slowdown, however, is giving advertisers a rare opportunity to bargain shop.

"This is the best buyer's market for media in the past seven years," Mr. Jarrett said. "Networks, magazines, radio [stations] are calling us."

Some spots in certain markets are as much as half off to get advertisers to fill the space, he added.

"Right now is a chance for someone in any category, if they elevate their spending, to increase their volume exponentially," Mr. Jarrett said. "Dollars go so much further now."

Local ad officials agree: When the economy gets rough, this is exactly the time to spend money on advertising.

"When times get bad, advertising is the very best weapon to get things good again," Mr. Laughlin said. "It's a hard sell because people are only looking at quarterly [financial figures]."

Mr. Laughlin said companies lose their voice and brand image when they stop advertising, and it takes a lot to rebuild that.

"Marketers who continue to spend in tough times will gain market share," Mr. Drake said.

Choice Hotels, which recently awarded its multimillion-dollar advertising account to Arnold Worldwide's Washington office, has no intention of slowing down its aggressive advertising plans this summer and fall, said Anne Curtis, a spokeswoman for the hotel franchiser.

"Sometimes the smart marketers bite the bullet [and advertise] and gain on their competitors," Mr. Laughlin said.

• This article is based in part on wire service reports.

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