Full Economic Recovery Seen Years Away

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NEW YORK ( -- The American Magazine Conference's Outlook panel this year was titled "2002 Ad
Photo: Doug Goodman
J.P. Morgan Chase & Co.'s Fred Hill is somewhat optimistic.
Turnaround: Likely or Longshot?" but one would have a hell of a time finding any attendees here who would bet on "likely" or even "long shot" as publishers adjust to an increasingly glum outlook.

The most optimistic voice on the panel belonged to Fred Hill, executive vice president of marketing and communications for J.P. Morgan Chase & Co.

"The bad news is, for 2001 and well into 2002, our ad dollars will be substantially off" the levels of the last two or three years, he said. But, he added, "by the end of 2002, a turnaround is likely."

Buttonholed following the presentation, Mr. Hill softened his comments somewhat, saying his firm's forecasters indicated that the beginning of a recovery around the end of third quarter of '02 "was possible."

Plea for local restaurants
"I am an optimist," he told "A lot depends on

consumer confidence and people spending money."

Accordingly, Mr. Hill, who lives not far from the wreckage of the World Trade Center, also pitched attendees to sample that area's restaurants because his local merchants are under severe economic pressure.

Elsewhere, comments about the industry's direction and prospects were blunter.

"Let's face it: Business was lousy on Sept. 10th," said David Verklin, CEO of Carat North America, New York. And, he added, Sept. 11 played into a new truth of the advertising business: "Clients are not looking for reasons to spend; they're looking for reasons not to spend."

As he previously told, Mr. Verklin reiterated Carat's forecast that overall ad spending will decline around 5% in both 2001 and 2002.

Exposed nerves
The panel at times clearly touched exposed nerves among conference attendees. When one panelist spoke of broad changes coming in the advertising business that would do away with the "overworked, under-motivated, 24-year-old media planner buying solely based on [lowest] CPMs," some scattered applause followed.

The two top ad executives on the panel -- the voluble Mr. Verklin and Jon Mandel, chief negotiating officer and co-managing director of Grey Global Group's MediaCom Worldwide, New York -- jousted over some issues. Addressing the notion of bringing broader ad packages to clients, Mr. Mandel turned to Mr. Verklin and, referring to one of Carat's clients, said: "Why don't you do a deal with Philips, Best Buy and Sony," involving retail and database elements, among others. "You grow their business, and they'll grow yours."

Cross-media 'not done well'
Mr. Mandel also came out strongly pushing for cross-media packages -- something Peggy Kelly, vice president of global advertising services for Bristol Myers Squib Co., said "has not been done well by agencies."

To which Mr. Verklin said, "We need to be more honest. Multiplatform packaging is thinly veiled rate negotiation." That declaration was met by a look from Mr. Mandel roughly akin to "there he goes again."

Mr. Mandel got his dig into Mr. Verklin, when the Carat CEO, detailing how upside down the ad process has become, pointed out buying TV at the last minute is cheaper than paying upfront rates.

Mr. Mandel: "Not if you bought in May right."

"I've said that for years about rate negotiations," said Mr. Verklin in the hallway immediately following the panel, dismissing the work-together notions of Mr. Mandel as "Mom and apple pie."

Mr. Mandel could not be located for comment.

More bad news
More bad news, part one: Mr. Mandel warned of the threat of inflation in 2002 in the wake of the Federal Reserve's economic stimulation policies.

More bad news, part two: Jerry Kaplan, president of Meredith Magazine Group and the panel's moderator, said that after the recession of 1991, it took three years for ad levels to return to 1990s levels. If Carat's prediction for 2002 is correct, the time frame for real recovery looks likely to only get longer.

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