And agencies are not holding their breath, either. On Omnicom Group's recent second-quarter earnings conference call, an analyst asked President-CEO John Wren whether clients were planning efforts to capitalize on the rebates. His succinct reply: "No."
While $38 billion-part of a $1.35 trillion tax-cut package-sounds like a lot of money, the ad industry doesn't expect it will do much to shake the economy out of its doldrums. Most observers see it as a little mad money for each taxpayer that will make the third quarter look a little better for a little time.
The rebates-up to $300 per single filer, and up to $600 for couples filing jointly-are a mere drop in the bucket to most households.
"What can you do with $300? I think they are kidding themselves with that kind of money," said Ellis Verdi, president of DeVito/Verdi, New York, and a veteran of retail advertising.
What to do with the rebate? "I recommend saving it, because you might need it," said Mr. Verdi.
By comparison, the Internal Revenue Service mailed $125 billion in tax refund checks this tax season, an average of $1,714 per taxpayer, but consumer confidence and retail sales got no significant boost from those checks. Based on the IRS's timeframe of six to eight weeks, the last of the refund checks should have arrived by mid-June; according to the latest Consumer Confidence Index, June saw a small uptick in consumer sentiment, which faded by July. (See TurnSignals at left.)
But even if rebates won't turn the economy, marketers still are trying to get a piece of the pie. Tricon Global Restaurants' Pizza Hut last month launched a special it touted as "almost as good as a tax refund, but tastes a whole lot better," and Office Max urges consumers to "use your tax refund check for a safe and sound investment!"-a safe.
Among those companies doing promotions tied to the rebates are Kmart Corp. (a 5% bonus to those cashing checks there) and Wal-Mart Stores (cashing check for money or a shopping card). Lowe's Cos. has put homeimprovement projects on its Web site that cost $300 and $600.
Home Depot has made the most of the rebate opportunity, with ads not only offering to cash checks, but offering to sell things for no payment and interest for six months. The retailer also has pushed energy efficient products for a double economic bonus.
"Truly, marketers are seeing that there is an opportunity," said Carolyn Bivens, president-chief operating officer of Interpublic Group of Cos.' Initiative Media North America, Los Angeles. The media buying agency's own research found 50% of consumers plan to pay bills and other debts and 20% intend to save or invest the money-an opportunity for insurance and financial companies, said Ms. Bivens.
Initiative's research-including a finding that home improvement projects were the most likely target of consumers who would spend their refunds-was instrumental in client Home Depot's decision to run the rebate-themed campaign.
A Gallup Organization poll found 63% of consumers said the rebate would make little or no difference to their household, while 32% said it would make some or a big difference. Additionally, few consumers plan to spend their rebates, anyway; 47% said they would use it to pay bills, 32% would save it and only 17% planned to spend it. But retailers stand to gain some incremental sales from the rebates, which arrive in the middle of back-to-school shopping season. Scott Krugman, senior director of public relations of the National Retail Federation, a retail trade group, said consumers will look at the checks as "found money."
"It won't be the be-all, end-all of the economic recovery," he said, but he predicted much of it will work its way into supplementing back-to-school spending as well as purchases of electronics and some big ticket items.
Even if consumers elect to bank the money or pay off debts, he believes, there will be a boost for retail down the line because consumers will feel better about spending money for the holiday season. The federation, he said, has a "cautious optimism" and anticipates the third quarter may show the start of a recovery.
"Anytime there's more discretionary disposable income, it's good for us," said Tom Clendenin, senior VP-marketing of Gap Inc.'s Old Navy division. "It should help."
Sears, Roebuck & Co., which is cashing the checks, has put its rebate message in existing newspaper pre-prints and in-store signs. For example, in advertisements for the Aug. 28 Super Sale, there will be copy indicating consumers should make their tax rebates "go farther" at Sears.
Sears spokeswoman Rebecca Hary, however, said, "We do not anticipate a significant lift in sales from the tax rebate." She added, "There will be a lot of competition for those dollars."
Kurt Barnard, president of Barnard's Retail Trend Report, said retailers' advertising indicated stores are happy to cash checks but are not offering much incentive to consumers beyond that. He noted that many retailers already have discounted prices considerably in the sluggish market. "They can't give another 20% on top of that," he said.
"There will be some minimal effect, but I've yet to talk to a single retailer who feels there will be more than a tiny impact on sales" from the rebates, Mr. Barnard said. July, he noted, was a very disappointing month for sales.
While the tax rebate is no more than a "Band-Aid," other measures, such as lower energy prices, would be much more significant, said Walter Loeb, publisher of Loeb Retail Letter.
Combined with falling energy prices, increased consumer spending could jump-start the recovery by year-end, say the believers. They point out that consumer spending is an increasing part of the economy.
"The national pastime appears to be shopping and not baseball," wrote Salomon Smith Barney equity strategist Tobias Levkovich. In a research note, he mapped out a rough road to recovery starting with a rebate-fueled boost in spending during the fourth quarter and lasting into the third quarter of 2002, when the technology industry begins to recover.
"I don't think there's enough here to turn around the economy," said Initiative's Ms. Bivens. "But this economy is driven-two-thirds of it-by consumer spending."