Media Figures Offer Guardedly Optimistic Ad Spend Outlooks

NEW YORK – Major ad spending for 2002 will be up almost 2 percent from 2001 to $143 billion, said John Perriss, chief executive of Zenith Optimedia, as Bob Coen, svp, director of forecasting for Interpublic Group of Cos. Universal McCann, predicted a rise of 2.6 to $240 billion, a figure which includes all spending categories. Both made their comments as the two guests on a panel discussion as part of UBS Warburg’s 30th Annual Media Week Conference at the Grand Hyatt in New York today.

Both executives also presented varying optimistic views on the next two years, with Perriss expressing a degree more pessimism than Coen.

Another panel of media executives–at the CSFB Media Week Conference, also in New York–focused on current spending trends. The panelists acknowledged a recent uptick in ad spending on TV but cautioned that it might be a “false positive” since it’s driven by car companies offering 0 percent financing and a blitzkrieg of movie releases around the holidays. The 0 percent deals won’t last much longer, they said.

Furthermore, other forms of media, including print and radio, still appear to be mired in the recession, the panelists noted. “TV is doing well, but at the expense of others,” said Jon Mandel, co-CEO of Grey Global Group’s MediaCom. “Has the bleeding stopped? Yeah, but the wound isn’t healing yet.”

Further clouding hopeful signs is a paucity of new advertisers, Mandel said. In fact, the number of advertisers is “down a lot,” he said.

Looking ahead, David Verklin, CEO of Aegis Group’s Carat North America, predicted that ad overall spending will rise about 2.8 percent 2003 — in line with other industry estimates. And within the TV sector, “local cable is going to explode in the next few years,” said Bill Cella, chairman of Interpublic Group’s Magna Global USA. Why? Because it’s “very targetable” and therefore appealing to advertisers such as car companies, Cella said.

At Warburg’s conference, Perriss and Coen seemed to be in accord on 2002. “During the course of the year we have added $2.6 billion to our estimate of 2002,” Perriss said of the U.S. market. “The congressional election was a big contributor to this adjustment having been predicted at $750 million and actually generated about $1 billion in the end.” For its projections, ZenithOptimedia focuses only on major media spending: TV, print, radio, cinema, outdoor and Internet categories. Coen looks at all categories, including local advertising and even yellow pages.

For 2003, Perriss projects moderate growth in the U.S. of 2.2 percent over 2002 to $146 billion, which he couched in pessimistic terms. “There is no election, slower GDP growth, plus I’m not certain that consumer demand, which has been the driving force behind the economy, will continue to hold.” He opined that for the economy to regain its health again, short-term pain such as layoffs to help get corporate profits back up, will likely be necessary.

“2003 should be a better year for the economy and advertising barring the worst possible developments in the Iraq situation,” Coen said, announcing his prediction that all advertising in the U.S. will be up 5 percent to $249 billion. “I’m optimistic about the economy and that the drain of the dotcoms and the stock market troubles are pretty much over,” Coen said.