Spending Forecast Rosy, but Midwest May Lag

U.S. ad spending for 2003 will rise 6 percent from 2002 to $242 billion and will increase by a similar amount each year through 2006, revealed a forecast by research firm Global Insight. Spending in Atlanta, Orange County, Calif., and Tampa, Fla., are 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 newspapers and other below-the-line advertising, will present his updated forecast on Dec. 9. Zenith Optimedia, which measures only major ad media, sees growth for 2003 of 1.5 percent to $137 billion.

While past ad recoveries were fueled by strong retail and automotive sectors, the next wave of advertising growth will shift to service-oriented businesses, said John Rose, GI principal. The increase will be fueled by entertainment, pharmaceuticals, cosmetics and financial-services institutions, as national advertisers try to reach aging baby boomers.

The economic recovery will boost incomes on the West Coast, as population growth of high earners shifts to that area, increasing rates ad vertisers will pay there, Rose said. The Northeast and Midwest will struggle with lower in come growth, negatively impacting those ad markets, Rose said.

“The West Coast and parts of the South look more attractive economically,” he said. “The more positive areas will have a lot more people who will have a lot more jobs and will be driving retail sales.”

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