Katrina Prompts $91 Million Drop in Promotion Spending: Report

Spending on consumer promotions is projected to drop by $91 million, event sponsorships by $53 million and licensing by $2.4 million, as a result of Hurricane Katrina, according to PQ Media.

Spending on direct marketing is projected to fall $87.6 million and customer publishing by $84 million from August 2005 and Sept. 2006.

A total $378.6 million is expected to be lost due to the Aug. 29 storm that ravaged parts of the Gulf Coast and Florida. New Orleans will account for 45.5% of the lost spending ($150.9 million) due to its high reliance on marketing its tourism industry.

Media spending is expected to fall by $1.13 billion from August 2005 to September 2006, making it the costliest natural disaster to hit the industry in recorded history, PQ reported. And while this represents a decline of just 0.2% in estimated media spending of $887.37 billion, the loss is estimated to account for 2.2% of media spending of $50.97 billion in the 20 affected designated market areas.

The only catastrophic event to have a greater impact on media spending than Katrina was the Sept. 11, 2001 terrorist attacks in New York City. Ad losses in the four days following the attacks were estimated at between $750 million and $850 million. Rita was the second-costliest hurricane in 2005, with losses estimated to reach $210.3 million over the next year. Wilma follows closely at $206.5 million.

Consumer spending on media will drop over the 12-month period due to closed venues, service interruptions and declines in discretionary spending as people continue to lose jobs. The decline is projected to reach $452.6 million— access $161.3 million; Internet $84.5 million; home video $83 million; books $27.9 million; recorded music $25.9 million; box office $25.9 million; and video games $16.1 million.

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