Is Chicago beginning to slip further behind as a major advertising market?
New data suggest that the third-largest ad market may underperform not only the two largest markets, New York and Los Angeles, but most other major markets as the advertising industry pulls out of its prolonged slump.
While total advertising expenditures in Chicago in 2002 are estimated to be roughly $7.6 billion, a new forecast by research firm Global Insight says that Chicago will perform under the national average growth rate each year through 2006.
The company predicts that nationally advertising will grow by 7 percent annually, while Chicago will expand by only 6.4 percent.
The company cites familiar themes: slow growth in employment and income and fewer advertising-intensive industries. Unlike in other markets, growing advertising outlets such as cable TV and the Internet are “underrepresented,” authors of the study say.
Perhaps more important, media consolidation, especially in New York, is creating more national advertising opportunities for companies. That includes the increase of ad revenue going to big cross-media advertising packages, which are mainly driven out of New York.
“It has made the mounting of national advertising campaigns more cost effective,” said John Rose, managing partner of Global Insight. “Companies are creating more integrated national campaigns that speak with a single voice. There has been a great deal more done in that area and we see more of that in the future.”
Chicago has also lost several headquarters over the past few years, making it less attractive for some advertisers from a geography standpoint.
The news is not good for local agencies, which rely on a steady diet of advertising growth for their survival. Several agencies in Chicago see little light at the end of the tunnel as new business in the city remains stagnant.
Nationally, Global Insight predicts that this year will finish with a more robust than expected 2.8 percent growth rate in advertising expenditure. Companies spend more than $220 billion in advertising annually.
The fastest growing ad markets over the next four years? In this order, it will be Atlanta, Orange County in California, Tampa-St. Petersburg, New York and Los Angeles.
Ranking near the bottom in growth will be San Diego, Boston, Dallas and Chicago, according to the study.
Cutting jobs at Capps Digital: It’s been 14 months since Leo Burnett shocked the print production community in Chicago by forcing its creatives to funnel much of its print production business in-house to Capps Digital. Apparently that influx of business wasn’t enough to stave off layoffs at the unit. On Friday, the in-house production facility fired 12 people and transferred another 11 people to Burnett’s new iLeo direct and interactive unit. The 22 jobs represents less than 10 percent of Capps’ staff, a spokeswoman said.
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She also attributed the layoff to the economy, noting that until this point, Capps had not had to cut jobs in this current downturn. But given that Burnett’s stated goal was to drive at least 75 percent of its print production business through Capps, the Capps cuts may say more about how much print work has fallen by the wayside at Burnett. Since we have yet to see a Marlboro ad appear anywhere this year (Philip Morris continues to say it hasn’t eliminated Marlboro print advertising), our guess is that cuts in PM billing (Burnett’s biggest client) may be the cause.
Levy gets Manchester United: Chicago-based Levy Restaurant inked a consultancy deal with United PLC for the storied soccer club’s dining operation on both match day and non-match day at Old Trafford stadium in the United Kingdom. The deal brings Levy into one of the most famous sports venues in the United Kingdom.
Manchester United Catering operates 55 food and drink kiosks in the stadium selling roughly 40,000 items every game, and the operation serves 4,000 sit-down meals in 16 suites and 180 private hospitality boxes.
On the move: Lawrence Tsoumas, formerly with the Ritz-Carlton in Amelia Island, Fla., was hired as the director of marketing of The Peninsula Chicago. He replaces Nora Melikian, who left to start her own business. … James Ellis, vice president/creative services at Tribune Broadcasting, named vice president/brand management at Tribune Co., a new post. … Chris Duffy, formerly with Foote, Cone & Belding, Chicago, jumps to Euro RSCG Tatham Partners as group account director. Also at Euro RSCG Tatham, Eliud Kauffman, formerly with Clifford Public Relations’ Los Angeles office, joined the Chicago agency as management supervisor on the agency’s Red Lobster account.