Economy Watch: Tech marketers, publishers anticipate more ad squeeze

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The technology-heavy Nasdaq continues its slide, and investors wonder whether the market's hit bottom yet. So do tech publishers and marketers, who are soberly assessing their prospects for a second half of the year that's not likely to show any mercy.

"We're going to have a tough year," said Kelly Conlin, president-CEO, IDG Worldwide, publisher of PC World and The Industry Standard, among other popular titles. Mr. Conlin's publications, key staples for information-technology professionals and tech executives, are, without a doubt, much leaner now that dot-com dollars have dried up and as tech marketers pull back.

"It just seems to be that everybody's in a holding pattern," said Sheila Craven, president of Ad-scope, an ad research and tracking firm. "We've incurred a damage that it's going to take a couple of years to recover from," she added, referring to the tech slump and dot-com implosion. The crisis is particularly poignant for ad salespeople. One ad sales rep told Ms. Craven recently, "All my clients are out of business."

IDG's Computerworld took a major hit recently when Oracle Corp., one of its biggest advertisers, pulled its schedule, allegedly due to a dispute over editorial coverage. Oracle spent about $2 million in Computerworld editions last year. Oracle spokeswoman Jennifer Glass declined comment on the dispute but explained that the company has increased spending with business publications. She said Oracle hasn't trimmed its $100 million global ad budget this year. The company breaks a new campaign today via Grey Global Group's Grey Worldwide, New York and San Francisco. An IDG spokeswoman did not return calls by press time.

Despite the gloom, tech companies' ad budgets are projected to increase about 10% this year, according to a survey of 125 tech advertisers by BRG Research, Provo, Utah. BRG's study was conducted earlier this year when marketers and analysts were betting on a second-half rebound. It's unclear whether companies surveyed are less optimistic now. Marketers contacted for this story did not respond to phone calls or e-mail inquiries.

However, Adscope data showed significant ad page declines from Jan. 1 through Feb. 28. For example, IDG's ad pages plummeted nearly 30% from the same period last year, with the Standard down 61% and Computerworld down 20%; Ziff Davis posted a 38% decline in ad pages and Imagine Media, publisher of Business 2.0, had a 24% decrease. CMP Media and Cahners Business Information were the only bright spots, with 18% and 4.4% increases, respectively.

A soft market is no time for companies to go dark on advertising, analysts contend, suggesting companies can effectively steal share from competitors who reduce their ad presence.

Adobe Systems, Dell Computer Corp., Fujitsu, SAP, Sun Microsystems and Unisys are among the tech bellwethers that have modestly increased advertising in IDG publications, according to Mr. Conlin.

IBM Corp. recently said it will increase overall ad spending about 15% to 17% this year on a global basis. Intel Corp., through a spokeswoman, said no ad cuts were planned, and Microsoft Corp. has revved spending on a variety of important initiatives. The software giant will spend $500 million globally to market the Xbox videogame console due out this fall.

The squeeze on marketing dollars remains severe, and that has companies deploying their media dollars differently. For example, last year tech marketers allocated 22% of their media dollars to computer print titles; this year, that number is expected to increase to 31%. Tech advertisers surveyed put 13% of their media dollars toward TV last year, compared with 9% projected for this year. The percentage of business print dollars, intended for such titles as McGraw-Hill Cos.' Business Week or Time Inc.'s Fortune, interestingly, remains 27% for 2001. Internet advertising went down slightly from 15% to 12%, though e-mail newsletters went from 4% to 6%.

"The era of the large budgets driving mass media has been replaced by more targeted marketing focused on driving revenue, on selling products to targets who can buy their product," Mr. Conlin said hopefully. "Marketing is going back to basics."

Tech advertisers are looking for cross-platform media deals, or at least aggregated ad deals. "The big advertisers are definitely looking to streamline their interactive-media spends. We're hearing that they'd rather partner with a few key targeted online properties, preferably properties with a powerful brand," said Wenda Harris Millard, president of Ziff Davis Internet and chief Internet officer, Ziff Davis Media, by e-mail.

A pullback on brand advertising would seem logical in a time of fiscal austerity, but it's not a simple equation, notes at least one executive.

"We haven't noticed a trend or shift away from one or the other relative to market conditions," said Scott Crystal, exec VP-publishing director of the Consumer Media Group of Ziff Davis Media, via e-mail. Ziff consumer titles include Yahoo! Internet Life, Expedia Travels and FamilyPC. "In general, advertisers continue to push the media community to come up with unique ways to showcase their brand above and beyond advertising either through events, online [or] sampling."

At least one publisher, Time Inc., offers a mixed bag. According to a company executive, Hewlett-Packard Co., Microsoft and Fujitsu were "way up" in terms of ad bookings across the company's portfolio while Apple Computer and Palm were "up slightly." The executive said Dell and Compaq Computer Corp. were "way down," while Oracle, Sun Microsystems and IBM were flat.

"We're down 20% [in ad pages] this year," notes Drew Schutte, publisher of Conde Nast Publication's Wired. Despite the soft ad market, Mr. Schutte thinks Wired has an opportunity to gain share because it attracts a diverse slate of advertisers. "Wired's different. We have a strong tech advertiser base, but we've built up travel, financial, luxury and liquor, and for the moment, they're holding," he said.

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