Knock-on impact of financial crisis may be felt longer term in advertising

The current turmoil in the financial sector, in the U.S. and in Canada, has spawned uncertainty in other sectors. According to a story in Advertising Age, the immediate short term effect on magazines won't necessarily be dramatic, but in the longer term there may be some repercussions from battered consumer confidence.

"We knew over a year ago that the credit crisis was going to have an impact on financial advertising, which was then and still is, obviously, a pretty big concern. It's the largest category of advertiser in our space," said Vivek Shah, president of Time Inc.'s Fortune/Money Group. He added: "Specifically, the firms that have been specifically most impacted have not necessarily been our largest advertisers, but it's created a general malaise that I think has affected the financial category, and frankly, the economy in general."

Since merchant banks like Lehmans and Merrill Lynch were big into sponsorship marketing, "that stuff may not be as robust" said Donna Speciale of MediaVest USA.

Ad-industry analysts appear more concerned with the domino effect on consumers of such distressing news. The moves "could affect unemployment drastically over time, which affects travel and credit cards and consumer spending. I think there is more of a long-term effect for us than there is short term," Ms. Speciale said.