- The Washington Times - Thursday, March 20, 2003

The war with Iraq threatens the recovery of the advertising industry, which in recent months has demonstrated signs of life after its worst decline in decades.
Some analysts had predicted advertising spending would increase as much as 4.5 percent in 2003. But as the drumbeat of war has grown louder, some of those estimates have been scaled back.
"If this is all over in two weeks, the impact will be negligible. If it last six weeks or longer and corporate profits are going in the trasher, then the impact will become a much bigger issue," said Jack Myers, editor of the Jack Myers Report, an industry newsletter.
He predicts spending will increase 2.8 percent this year. "I'm holding to that number for now," he said.
The war presents a minefield for advertisers. Media buyers say their clients are reluctant to purchase advertising space in newspapers and newsmagazines, which are expected to devote many pages to war coverage. Similarly, advertisers are avoiding television news programming, which likely will be dominated by footage from the front lines in the coming days.
"They're very concerned about commercial images being juxtaposed with images of war," Mr. Myers said.
Those concerns may be moot. The major television networks are expected to shift to commercial-free, round-the-clock news coverage during the first few days of the war.
MasterCard has said it will pull advertising from all media when the war begins. Procter & Gamble, Pepsi and Visa have said they will pull television spots during the war.
Other companies, including Anheuser-Busch, have said they will continue to advertise, although they will be careful to screen out any spots that might offend viewers.
Advertising agencies spent the last two days checking with clients, sometimes hourly.
"We're burning up the phone lines," said Cary Hatch, president of MDB Communications, a Washington firm whose clients include the National Geographic Society, Fannie Mae and the D.C. Lottery.
"Right now, things are so uncertain, and advertisers don't like uncertainty," she said. In some cases, companies have imposed clauses that will release them from their contracts once war is declared.
But few agencies are advising clients to pull their money out of their advertising altogether.
"Our message is: Rethink, don't retrench," said Carl Fremont, senior vice president and global media director for Digitas Inc., a Boston firm that helps clients such as American Express and General Motors use the Internet and databases for marketing.
For example, companies that are reluctant to advertise on television during the war may want to consider direct mail or e-mail instead, Mr. Fremont said.
Television advertising is expected to take the biggest dive during the war.
When networks pre-empt ads, they compensate advertisers by giving them "make-good" time slots at a later date. This occurred during the Persian Gulf war in 1991 and after the September 11 terrorist attacks.
The major broadcast networks could lose more than $200 million in advertising revenue during the first five days of the war, according to published reports.
The three main cable-news networks CNN, Fox News Channel and MSNBC could lose as much as $10 million on the first day of war coverage and as much as $6 million daily for an additional four days of ad-free coverage, reports said.
In the first few days after the September 11 attacks, wall-to-wall news coverage cost the television networks more than $1 billion in advertising revenue, although most of the money eventually dribbled back into the market.

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