NEW YORK Lee Westerfield, senior media analyst at BMO Capital Markets, has downgraded his U.S. ad spending forecasts, reducing his 2007 projections from an increase of 3.4 percent to 2.6 percent; and his 2008 projections from an increase of 4.3 percent to 3.7 percent. (He is also forecasting that 2009 ad spending will rise 2.7 percent.)
Westerfield said those rates of growth are below the trend line of the past four years—with the main reason being the softening of the financial services, home improvement and auto categories. He said, however, that while U.S. ad spending overall will be in a "waning" or "downward" cycle, there is "less than a 10 percent chance" that there will be an ad recession, where ad spending actually declines over previous years.
Westerfield said the hefty declines in ad spending projected in the financial services category, primary by money lenders, will not be as severe as the declines exhibited by the dot-com companies in 2000-01.
He said he expects both radio and newspaper stocks to show declines of 15-20 percent during 2008, but said he expects television stocks to hold their ground, primarily due to the presidential and other political races next year.
Westerfield expects continued solid growth in the Internet ad marketplace, and predicts that during 2008, ad revenue for online search companies like Yahoo! and Google will cumulatively rise by as much as 35 percent.