NAA estimates newspaper advertising could rise 6%

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Newspaper advertising should improve by at least 3.2% this year and possibly by as much as 6.1%, according to January estimates from the Newspaper Association of America.

For 2002, the NAA estimates total newspaper ad spending was $44.2 billion, down 0.2% from 2001. In the third quarter of 2002, ad spending totaled $10.7 billion, up 1% from a year earlier. It was the first quarterly gain for the year, following a second-quarter decline of 1.8% and a first-quarter drop of 6.2%.

Spending was expected to be up in the fourth quarter of 2002, and the positive trend will continue this year, according to NAA projections.

"The timing of a recovery in the labor market is the real difference [between the low and high estimates]," said James Conaghan, VP-business analysis and research for the NAA. "A major part of our slow performance last year was the labor situation. If we get more rapid improvement, we’ll be toward the higher end."

Conaghan also said continued uncertainty over a possible war with Iraq complicates the ability to forecast business and consumer spending.

The lower estimate of a 3.2% increase this year is based on a weak consumer marketplace, slow auto and housing markets and a flat recruitment market, which translates to marginal gains in classified advertising, Conaghan said.

The more optimistic 6.1% increase is driven by a more rapidly improving job market and slightly weaker real estate and automotive markets, he said. In this scenario, classified advertising would bounce back; retail advertising would post a modest gain; and national advertising would be up sharply.

For the third quarter of 2002, retail advertising totaled $5.1 billion, up 2.7% from a year earlier; national advertising was $1.7 billion, up 5.2%; and classified advertising was $3.9 billion, down 2.9%.

However, the decline in classified ad spending slowed as 2002 progressed. In the second quarter, classified ads were down 4.1% from a year earlier; in the first quarter, classified ads were down 13.6%.

Conaghan said that within the classified category there was some improvement in auto and real estate advertising, but not in recruitment advertising. "It’s the continued drag of the labor market that affected performance overall last year," he said.

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