Way back in 1920, the U.S. economy was in shambles. Unemployment was over 10% and inflation in some parts of the country was running at 20%. That year, the Republicans nominated Warren G. Harding, an Ohio Senator for president. Easily the handsomest man ever to run for the White House prior to Ronald Reagan and Mitt Romney, Harding had been a strong supporter of giving women the right to vote. That August, when women received the franchise, was only 10 weeks prior to the election. He and his running mate, Massachusetts’s governor Calvin Coolidge campaigned on the theme of a “A Return to Normalcy.” The idea was to correct things at home and stop being the savior of the world. Their predecessor, Woodrow Wilson, had tried to be just that when he entered World War I saying that he “was keeping the world safe for democracy. The return to normalcy was putting America back to pre-World War I conditions.
Harding and Coolidge won in a landslide. The handsome Senator garnered a huge majority of both the male and female vote. Immediately on being inaugurated, he cut taxes, played ball with business interests, and inflation fell sharply and unemployment dropped to 3.5% (most economists define full employment as 4.0%). A few years later Harding died in office with a scandal overhanging him. His Secretary of the Interior had awarded oil leases to friends in exchange for $400,000, an enormous sum in 1923. But the economy rolled on and the “Roaring 20’s” were quite a decade.
Today, many media executives, especially on the sales side, tell me that they just want things to return to normal. Who can blame them for the desire of a “2012 return to normalcy”? From my vantage point, it is simply not going to happen.
Several people tell me that the next couple of years will be won or lost depending on auto sales. There is stunningly good news here. Last week, the automobile research company R.L. Polk released data indicating that the average age of the U.S. car/light truck fleet is 10.8 years. This is the highest level in history. True, cars are made to last longer today than in the past but during 2008-2010 many kept their older cars as they were afraid to take out a loan on a new one. This past year, 2011, saw a 10% uptick in car sales. Given the slightly improving economy plus the age of the fleet requiring significant replacement, 2012 should be another solid year of advancement in car sales in the U.S.
But hanging the year solely on the automobile statistic is way too simplistic. As I look at both the economy and the media market, I don’t really know what normal is anymore. For the last two decades, American consumers went on a buying binge and the national savings rate went to zero. When bad times hit, the savings rate jumped to about 6% by spring 2009. Now, it appears that short-term enthusiasms have grabbed the national psyche once again and people are spending. Or, is it simply because the unemployment rate is high and millions of others are under-employed that people are tapping into savings to maintain a middle class lifestyle? Somehow we need to find a balance between buy now versus save and buy later with cash.
In the media world, something seems to be brewing and I have few allies when I talk or write about it. We are in the 5th year of weak media billing. It varies by medium and by market, of course. But, most media executives would love to see a return to the business they wrote and particularly, the ease of getting it, that they had in 2007. Some have literally referred to that period as the “good old days.”
Here is why I do not see a return to 2007. Is the economy improving? It appears to be moving steadily upward but at a very slow pace. If we grow 2% in 2012, we are on a track that will double the size of our economy in 36 years. Singapore is doubling every six and China every 8 years at current growth rates.
But more importantly, the media landscape has changed significantly since 2008 when people first saw advertisers begin to pull in their horns. Let us say that things are back on track by late 2013 or early 2014. That would be great and we all have to hope for it with so many Americans suffering and millions of others nervous about their prospects.
Let us assume that things are back to “normal” in the 1st quarter of 2014. Will any advertiser worth his salt execute the kind of plan that they would have in 2008? Of course not! Social media was but a gleam in the eye of cutting edge media planners then. Commercial avoidance via DVR’s existed but was half of what it was is now, and Hulu.com, instant Netflix and other alternatives to live commercial TV were just getting started.
Yes, my friends, the U.S. economy will get better. When, is not certain. It is certain, however, that the media mix, for that happy day, will be demonstrably different than what it was in the sunny days of 2007.
If you would like to contact Don Cole directly, you may reach him at firstname.lastname@example.org