The current crisis of the media industry is a consequence of poor revenues from the advertising market. Actually, advertising revenues are contributing more than 60% to the total revenues of German mass media, thus dominating the economic performance of media firms. This empirical contribution seeks to understand the cyclical behavior pattern of the advertising market and to test if the recent slump in advertising demand follows this cyclical pattern. In a first step, spectral analysis is used to identify potential cycle lengths. In a second step, the explanatory power of cycles for advertising demand is evaluated by inserting the most important cycle lengths into a regression model. All estimations are based on yearly data of the German advertising market from 1960 to 2003, differentiated by five types of media. The results underline a strong influence of overlapping cycles for the advertising market, with advertising in magazines being the only exception. There is no statistical support for the hypothesis of a structural break during the recent slump in advertising demand.
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Paper provided by Universitaet Augsburg, Institute for Economics in its series Discussion Paper Series with number
258.
Find related papers by JEL classification: L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media M37 - Business Administration and Business Economics; Marketing; Accounting - - Marketing and Advertising - - - Advertising E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
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