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Delta, advertisers hit hard by economic slowdown

The Delta advertising industry took a double whammy with the economic slowdown last year.

Advertising is typically one of the last industries to recover and the Delta region is one of the slowest geographic areas in the country to rebound. Industry leaders and national economists both forecast a slow ascent from the recession in 2002, with a more robust outlook for 2003.

“The Delta is usually the first to slide into a recession and the last to recover,” said Larry Fuss, president and general manager WOHT-FM in Cleveland, one of the leading radio stations in the Delta. “Demand for advertising has been down since recessionary times hit the Delta about three years ago. It took an even bigger slump after Sept. 11 and we haven’t come out of it yet.”

At the annual UBS Warburg Media Week Conference in New York last December, industry leaders said only modest advertising revenue projections for the Super Bowl, the Winter Olympics and congressional year election campaigns suggests that recessionary effects may linger.

“We’re starting with a slower pace of return than the last recession,” said Robert J. Coen, senior vice president and director of forecasting for Universal McCann Worldwide.

Expenditures from the nation’s top 10 advertisers dropped 9% in 2001, led by General Motors, which spent 24% less through July than the previous year. Coen predicted that U.S. ad spending would gain a modest 2.4% in 2002. But John Perriss, CEO of Zenith Optimedia Group predicted only a 0.8% gain.

David Cavileer, vice president and general manager of WXVT-TV, the CBS affiliate in Greenville, described 2001 as “the worst year I’ve encountered in 20 years.”

“It was most all of last year, not just post Sept. 11,” he said.

The Delta economy is at the mercy of agriculture, said Rick Kennedy, publisher of the Yazoo County Herald.

“When the crop goes bad there’s a difference in town,” Kennedy said.

Scott Knight, director of advertising for the Clarksdale Press Register, with a circulation of 6,400, said most of the newspaper’s advertising revenues are derived from mom-and-pop stores.

“We really took a big hit there,” Knight said. “When they’ve got a small business and not much money, advertising is the first expense they drop.”

In the last few years, the combination of bad crops or good crops with poor prices coupled with the number of plant closures has stymied business in the Delta. Textile mills in Mississippi and along the eastern seaboard have gravitated overseas.

“When 24 local businesses close in a two-year period, that’s going to take a toll,” Kennedy said. “From the data I’ve tracked locally, we started seeing things go south in March of 1999. It ‘staircased’ after that but has begun to stabilize.”

Allan Hammons, CEO of Hammons & Associates Inc. in Greenwood, established in 1975, said, “We’ve lost nearly every major manufacturer that I grew up with.”

“On the other hand, we’ve had a lot of good luck bringing in new businesses like Viking Range and Milwaukee Tool,” he said. “Viking Range has grown like ‘topsy.’ Other companies, like the John Richard Collection, Heartland Catfish and America’s Catch Catfish, have all had expansions. Despite their problems with Vietnamese fish, they continue to do well.”

In the Delta, many advertisers say print rates are overpriced while radio prices have been kept low. Outdoor advertising is strong, but increased regulation from the Mississippi Department of Transportation and beautification efforts by municipalities have limited outdoor advertising venues.

Several people have complained that the animosity between the two TV stations in Greenville has made it difficult for advertisers to deal with both.

“We’re competitors with WABG but it’s like selling cars,” said Cavileer. “If you go into a Ford dealer, they may say, ‘Chevy’s are the worst cars in the world,’ but they lose some credibility. I prefer to say, ‘Hey, Chevy’s a great car but let me show you what I’ve got that’s better.’”

Mike Elrod, vice president and general manager of WABG-TV, the ABC affiliate in Greenville, said, “We had a real strong fourth quarter in 2001 compared to 2000. Overall, 2001 was up slightly over 2000. When Sept. 11 hit, fourth quarter business developed stronger than we expected.”

Zero-percent financing advertised by car manufacturers was a primary reason for the uptick, Elrod said.

“For 2002, our advertisers seem optimistic and we hope the worst is behind us,” he said. “Obviously we still have a problem in the Delta area with unemployment, but officials are addressing that.”

Fuss said the radio station hasn’t had to offer deep discounts to fill spots.

“We’ve just had to be more creative,” he said. “Advertising is nothing more than inviting people to do business with you, and if times are slow, you need to be inviting more people to do business with you. It’s that simple.”

Debbie McBride, president and owner of Delta Design Group in Greenville, a 34-year old agency that primarily handles medical, agricultural, aquaculture and retail accounts, said increased competition has changed the advertising landscape in the Delta.

“For many years, Delta Design Group and Hammons and Associates were the only full-service marketing and public relations firms in the Delta,” she said. “Now there seems to be one everywhere. In the last couple of years, two agencies have shut down because of increased competition. I don’t think they realized how much of this business is based on service to clients and the ability to do research and pull from resources that have been built up over a long period of time.”

McBride said the slowdown has crossed all industry lines.

“We’re in an economic crunch and I can’t blame it on Sept. 11,” she said. “It’s up to us to turn it around by digging a little deeper and pulling our belts a little tighter. That said, business is improving. The Delta can be a thriving economic area again. We’ve got good leadership with elected officials and maybe we just need to look at a different approach.”

Some ad agencies are looking outside the region to supplement their income.

“It’s amazing what technology has done for the ad business,” McBride said. “Just because we’re based in the Delta doesn’t mean that’s our only client area. We have clients all over the state and all over the country. Business is out there and it can be found. You can do the same thing from Greenville that you can do from Singapore.”

When his agency opened, Hammons said most of the firm’s clients were from Florida, Georgia and Illinois “because there just wasn’t much money here for advertising and marketing.”

“Quite remarkably though, here we sit in one of the poorer parts of the state and we’re pretty doggone busy,” said Hammons, who primarily handles economic development, tourism, retail, financial and health care accounts.

“The volume of health care marketing is down right now,” he said. “The financial industry is not as aggressive unless there’s a merger. For the most part, they’re pretty quiet.”

Industry trends aside, matching the client to the media is key.

“Bottom line, a good media mix is best,” said Cavileer. “I’d like to see all businesses in the Delta get the most bang for their buck because it hurts us all when somebody goes out of business.”

Contact MBJ contributing writer Lynne Wilbanks Jeter at lwjeter@yahoo.com</a.

About Lynne W. Jeter

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