Ad Outlook Gets Sunnier

Last week, Madison Avenue dismissed fears of any postquadrennial blues in 2005, as two of the industry's top forecasters increased earlier global ad spending estimates.With optimism fueled by corporate profitability, a steady U.S. Gross Domestic Product and the fast-growing direct-mail and Internet sectors, Bob Coen, director of forecasting at Interpublic Group's Universal McCann, predicted a 6.1 percent rise in global ad spending to $553.4 billion. (His earlier forecast, made in June, expected global ad spending to climb 5.9 percent to $550 billion.) And Steve King, worldwide CEO of Publicis Groupe's ZenithOptimedia, said he expects an increase of about 5 percent to $388.3 billion—up from his prediction made in October of a 4.8 percent increase to $383.96 billion.The two execs, who were among the participants at UBS' Media Week conference in New York, revealed the better-than-expected estimates at a time when concerns about rising oil prices and waning consumer confidence are prevalent. Ad-spending levels in 2005 also face tough comparisons with this year's boost from the Olympics and the U.S. elections.And not everyone shares Coen's and King's bullish assessments. It's those quadrennial factors, along with marketers' search for cheaper, more integrated solutions, that have caused Merrill Lynch to lower its 2005 global estimates. ML now expects a global increase of 4.5 percent, while the U.S. forecast, excluding direct mail, has been revised to expect a 4.6 percent jump to $222.5 billion—down from the earlier prediction of a 5.1 percent rise.In revising his forecast, Coen cited factors such as continuing growth in countries like China, Indonesia and Russia, as well as a boost in the U.S. from marketers in sectors like beverages and snacks, financial services and telecommunications. For 2005 ad spending in the U.S., Coen expects an increase of 6.4 percent to $280.6 billion.King said 2005 will have the best global ad-spending prospects since 2000, with 2006 and 2007 both expected to rise by 6 percent. "The Internet will shortly overtake outdoor as a mass medium," said King, noting that the Asia Pacific region will see the largest increase in overall ad spending during the next three years. He predicted that at current rates of ad-spending growth, "Asia will eclipse Europe within 10 years." In the U.S., he sees a 4.2 percent surge to $175 billion in 2005 ad spending.Coen said 2004 has so far exceeded his expectations. Last year, he predicted a 6.9 percent increase in U.S. advertising for 2004, but year-to-date, domestic ad spending in traditional media is up by 8.8 percent to $71 billion—in part due to the Olympics and the election. (For his part, King said 2004 global ad spending rose nearly 7 percent to $370 billion.)As for ad spending in local media markets this year, Coen had projected a jump of 6 percent, but it was up 4.5 percent, with yellow pages showing a particular weakness. (For 2005, Coen sees a 4.8 percent increase.) "Local advertisers have been pretty stingy with their money, so the gains have been quite modest," he said.

Brand Marketing

Ad Outlook Gets Sunnier

Noreen O'Leary

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Noreen O'Leary