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- Automotive advertising, a major category for the industry, has been dropping at double-digit rates. In this case, the problems appear to be cyclical and structural. Clearly, there is a trend toward the Internet for auto advertising. However, weak auto sales and scaled-back incentives also are exerting cyclical pressure. Advertising Age recently noted that Ford (F - Get Report) would have flat to lower ad expenditures this year, and a greater proportion of the spending was headed online.
- National advertising, another major category, has also been weak. Telecom has been a big culprit, but I believe this is largely due to recent mergers, particularly among wireless carriers. The wireless industry has been a big newspaper advertiser, but mergers have taken AT&T Wireless and Nextel out of the picture over the past two years, allowing the acquirers, AT&T (T - Get Report) and Sprint (S - Get Report) to gain economies in the advertising budget. Thus, this factor would seem to be cyclical, and since the mergers are lapped on a year-over-year basis and new branding comes from AT&T, the recent pressure on this category could dissipate, and growth might return.
- Mergers have also caused a problem in retail advertising. As Federated Department Stores has bulked up, it has meant loss of advertising in key markets where the company formerly competed with Marshall Field's or May Department Stores. Since Federated is switching from a regional to a national branding strategy by putting the Macy's nameplate on hundreds of stores, the impact on newspapers is structural. Federated will now spend much more of its ad budget on the most effective national ad platforms, such as TV.