CHART: How Vanity Fair’s Ad Sales Predict Stock Market Boom-And-Bust Cycles

vanity fair kate moss

Vanity Fair’s ad page sales can be used as signals for when the stock market is becoming too frothy, or when it’s poised for a turnaround. (See chart below.)

We got hold of the magazine’s total ad page numbers, going all the way back to 1998, and crunched them against the Dow Jones Industrial Average.

Ad page sales in Vanity Fair cycle wildly, and are not obviously linked to the health of the broader economy as a whole. The magazine’s fall issues are always thick with fashion ads, for instance, but its January editions tend to be thin from the post-Christmas dropoff.

In order to make sense of the ad page numbers, we took their percentage growth from the year before, indexed to 1998. That produces a relatively smooth line showing whether the magazine’s ad sales are growing or declining.

Lo and behold, when U2’s Bono was asked to edit an issue on Africa in 2007, and he put President Obama on the cover, doom followed: Although ad sales peaked at 106 pages (200 per cent more than the prior year), the stock market promptly fell of a cliff.

Similarly, VF’s pages hit a high of 85 pages in July 2000 (with Renee Zellweger on the front), nearly 160 per cent more than the 1999 number. Right on schedule, the market for tech stocks went into a death spiral.

A possible explanation for this is that when the economy enters a bubble phase, companies find themselves with excess profits and revenues — which allows them to buy advertising in vehicles that would normally be out of their price range. (VF’s audience is large and upscale, which is why it’s able to charge these prices.)

VF is, arguably, just as useful at signalling when you should dive in to a depressed market. Ad page declines tracked stock declines throughout 2008 and 2009. But they peaked again at 150 per cent growth in 2010, a good year for those willing to buy and hold.

Back in February 2003, when VF put Salma Hayek on the cover, ad sales again spiked upward — and presaged five years of solid growth in stocks:


vanity fair ad pages dow jones

[credit provider=”Jon Terbush / Business Insider”]

Thanks to Vanity Fair for providing the numbers.