Ad Recovery in Sight

The consensus continues to build toward recovery in 2003, but with a handful of categories leading the climb back, some markets will benefit more than others, according to a new forecast by research firm Global Insight.

Among the findings: 2003 U.S. ad spending will rise 6 percent from 2002 to $242 billion and will increase by similar percentages through 2006, with spending in Atlanta, Orange County, Calif., and Tampa, Fla., expected to grow the most.

The rosy outlook, the first foray into adspend prediction by Lexington, Mass.-based GI, is shared by Bob Coen, Universal McCann svp, director of forecasting, who estimated in July that ad spending for 2003 would be up 5.5 percent from 2002 to $250 billion.

Coen, who covers all media—including local newspapers and other below-the-line advertising—for his findings, will present his updated forecast on Dec. 9. Zenith Optimedia, which measures only major ad media, sees modest growth for 2003 of 1.5 percent from 2002, to $137 billion.

While past ad recoveries were fueled by strong retail and automotive sectors, the next wave of ad growth will shift to service-oriented businesses, said John Rose, GI principal. These include entertainment, cosmetics, pharmaceuticals and financial-services companies, as advertisers try to reach the aging baby-boomer population.

The economic recovery will boost budgets on the West Coast, as population growth of high earners shifts to those areas, increasing ad rates there, Rose said.

The Northeast and Midwest will struggle with lower income growth, impacting those ad markets somewhat negatively, he noted. “The West Coast and parts of the South simply look more attractive economically,” Rose said.

GI’s forecast is in part predicated on potential regulatory changes on cross-media ownership by the Federal Communications Commission, which is considering removing the cap on how many markets in which a single company can own media outlets.