Robert Coen, the director of forecasting for Universal McCann, lowered his forecast for the U.S. market to a 5.6 percent increase (to $286.4 billion), compared to the 5.8 percent jump he projected late last year. The lesser increase is still double the 2.8 percent growth rate in 2005, although a good portion can be chalked up to spending on the Winter Olympics and political campaigns this year.

Coen's downward projection comes partly in response to modest 1.4 percent growth in this year's first-quarter spending on cable. Coen attributed the slowdown to higher cable prices, which deterred advertisers who previously had been eager to shift over from broadcast. "I think it's a rebellion to the prices," he said.

That prompted Coen to lower 2006 projections for cable to 4.5 percent growth (to $19.1 billion), from the 7 percent forecast in December.

First-quarter results for both broadcast television and the spot market were considerably more robust than cable. Despite NBC suffering a $70 million loss on the Winter Games, Coen said the Olympics contributed to a 13.3 percent rise in spending on the Big 4 networks, while spot grew at a 7.5 percent rate.

Coen left unchanged his projection for the Big 4 networks for 2006, where he called for a 6.5 percent increase (to $17.2 billion). And with political races expected to heat up this fall, he boosted his projections for the spot market to 10 percent (to $11 billion)--up from an 8.5 percent increase.

One factor in Coen's overall 2006 downgrade is only 2 percent growth in the auto category on network television in the first quarter, and only a 1 percent increase for the category in all media. Also, the beer and wine category, even with the Olympics, saw a 2 percent drop in network spending and a 5 percent drop in all media in the quarter. And with prescription drug advertising under siege by Congress and activist groups, the once-strong category posted only a 4 percent jump in network spending. Overall, however, the category grew 7 percent, largely on the backs of an 18 percent increase in magazine spending.

"We're not really going to see a real return in ad demand until we see an improvement in these categories," Coen said.

One area that is not suffering is Internet advertising, which delivered a 19.4 percent rise in the first quarter this year--a figure that doesn't even include the climbing search ad market.

Coen's projections are well-respected on Wall Street and Madison Avenue. He unveiled his altered mid-year forecast before a room full of analysts, media executives, and reporters.

As the auto and beer categories lose steam, the fiercely competitive telecommunications and insurance categories are showing healthy growth. Telecom jumped 32 percent in network spending in the first quarter (35 percent in all media) and insurance leaped 24 percent (26 percent overall). "Those are two categories now experiencing tremendous competition," Coen said.

Not surprisingly, Coen has bullish projections for Internet marketers, projecting that their spending will increase 25 percent (to $4.6 billion) this year, although the category is still relatively small.

Local advertising is a trouble spot for media companies, Coen said, lowering his forecast for 2006 local spending to 3.1 percent (to $101 billion) from the previously projected 4 percent. That's partly in response to reduced spending by retailers who have undergone consolidations and, Coen wrote, "most of the remaining local entrepreneurs surviving by turning to the most draconian price and expense control tactics."

Local newspapers, an area of particular struggle, are projected to show only a 2 percent increase this year--even with a political-year bump, Coen said, noting that newspaper operators are trying to respond to consumer consumption of online news but falling short. "They're all breaking the bank trying to make money off their online ads, but I don't think that's going to solve their problems," he said.

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