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Weak Local Ad Spending Drags Down '03 Forecast

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Ad spending in the second half of the year will pick up, supported by a stronger economy. But that will not be enough to offset the first-half sluggishness caused by the Iraqi war and weak economic expansion, according to Bob Coen, svp, director of forecasting for Universal McCann, who last week revised downward his earlier forecast of total 2003 U.S. ad expenditures.

In December, Coen predicted spending would rise 5 percent in 2003 to $250 billion. Last week, he changed that outlook, saying spending would instead rise 4.6 percent to $247 billion. The drag is largely due to weakness in local ad spending, he said.

"Our expectation for U.S. advertising by national marketers is not much different than it was at the end of last year, but spending by local marketers is still very sluggish," said Coen, whose forecasts consider all advertising, including classifieds and Yellow Pages.

In terms of national advertising, Coen predicted growth of 5.2 percent in 2003 to $153 billion. In December, he forecast growth of 5.3 percent to nearly $154 billion.

Predicting global spending totals for 2003, Coen maintained his previous projections: an increase of 4.3 percent to $469.8 billion.

Coen struck an optimistic note for 2004, forecasting a 6.5 percent rise in U.S. ad spending to $263.8 billion.

"By the end of this year, we expect advertising spending by both national and local marketers to be considerably more robust than in recent months," he said.

New York-based UM is the media unit of Interpublic Group's McCann-Erickson.

—DAVID KAPLAN