Top Analysts Spot Signs of Ad Industry Recovery

NEW YORK — The beginnings of recovery for the advertising industry will present themselves next year, as the industry’s health is currently showing signs of stabilizing, Zenith Optimedia Group reports in its annual December forecast.

Business and consumer confidence is poised to improve at some point in 2002, Zenith Optimedia forecasts, though its analysts decline to pinpoint any specific period. Still, the report expects recovery in travel and leisure/sport, noting World Cup soccer and winter Olympics in 2002, and further out, for household durables to respond to deferred demand. Some countries report deregulation of over-the-counter pharmaceuticals remains a source of growth, the report says. As for the weaker categories that Zenith Optimedia views as not likely to see much of a boost are: dotcoms, telecommunications, financial services, and help wanted.

Modest but positive growth in U.S. advertising spending is projected at a total of $239.3 billion for 2002, a gain of 2.4 percent over 2001, said Bob Coen, an svp and director of forecasting at the Interpubluc Group of Cos. Universal McCann. Coen made these predictions at the UBS Warburg Media Week conference in New York City this morning.

Coen sought to compare and contrast the last economic downturn of the early 1990s with what advertisers face in the current recession.

“Although advertising traditionally lags behind an economic recovery, we believe advertising and the economy will move closer into parallel than had been the case ten years ago in 1992, when the economy began to recover after the 1990/1991 recession,” he said. “Although there are many similarities between these two post-recession years, there are also some dissimilarities,” such as higher rates of unemployment and inflation that aren’t present now.

Zenith Optimedia forecasters are also stressing cautious optimism about the year ahead. “We do not expect miracles,” the report says. “Compound average annual growth in worldwide advertising spend 1990-1999 was 2.4 percent in constant prices terms. On our present numbers, the 1999-2004 rate is 1.0 percent.”