Cyclical Behavior of National Advertising

ALTHOUGH annual data on national advertising expenditures do not -L~L suggest much cyclical variability, examination of quarterly data shows that advertising is quite responsive to swings in general business activity. For the postwar period, in fact, conformity between business cycles and cycles in advertising is very close. There is a general tendency for peaks in national advertising to follow business-cycle peaks by several months, although the amount of this lag has shortened in recent years. On the other hand, troughs in national advertising at cycles seem to have preceded troughs in business in earlier periods, but this response of national advertising to changes in general business activity has slowed somewhat in the most recent period and is now about the same at cycle troughs as at cycle peaks. The typical length of expansions and contractions in advertising is about the same as that for gross national product. The expansions in advertising have been perceptibly larger than those in gross national product and in industrial production, except for 1958-60 when advertising increased only about as much as industrial production. Contractions in advertising typically exceed those in gross national product but are more modest than are those in industrial production. Outdoor advertising and radio spot, whose rates of growth are the smallest of the media under study, have cyclical characteristics most typical of mature, slow-growing industries. On the other hand, network and spot television are characterized by cyclical behavior of the sort associated with rapidly growing industries. The three print media (business papers, magazines, and newspapers), whose rates of growth fall between the other two groups, also have cyclical characteristics that fall between the slow-growing and the fast-growing media.