Slower Ad Growth Expected Next Year

  • by December 5, 2000
NEW YORK (AP) - Two of the advertising industry's leading forecasters expect more moderate growth in ad spending next year as the economy slows, after the Olympics and presidential election helped lead to a banner year in 2000.

Growing concern about slower advertising growth has been a major factor weighing down the stocks of major media companies in recent weeks.

Robert Coen, director of forecasting at Universal McCann, said he expected national advertising spending in all media formats to grow 6.3% to $151.8 billion next year. This year, national advertisers planned spending of $142.7 billion, up 11.8%.

"We think the media marketplace looks pretty strong," Coen said at an annual media conference hosted by UBS Warburg, the Swiss bank that recently acquired the PaineWebber brokerage.

Despite the gradual slowdown, Coen said he still expected advertising spending as a percentage of gross domestic product to increase this year, as it has for every year since 1994.

"There's going to be some bounces, but generally the century is getting off to a good start," Coen said. "We remain optimistic."

The other forecaster, Zenith Media chairman John Perriss, predicted that global advertising spending would grow 6.0% next year to $351.7 billion, following a 7.9% increase this year to $331.8 billion.

"We're in for a gradual soft landing," said Perriss. "We see a gradual coasting down rather than running into a wall."

Perriss, while acknowledging that 2000 probably represented a peak in advertising spending, thanks to strong economic growth and other factors, he also said that advertising outlays were showing less sensitivity to economic cycles that in the past.

"Advertising usually is seen as a cyclical business that overreacts to booms and recessions," Perriss said. But we see a trend that marketing is a 'must have,' a fixed cost for industries."

Perriss predicted slight declines a few years further out, with 5.9% growth in 2002, and 5.6% in 2003.

Among major media categories, Coen predicted that cable TV would see the greatest growth in national ad spending next year, up 12.5% $10.1 billion, following a surge of 20% this year.

Newspapers were expected to see the next highest level of growth, with a 7% increase to $7.7 billion next year, on the heels of a 13% rise this year, according to Coen's forecast.

The four TV networks were only expected to see 1% growth in ad spending to $15.9 billion, following a 12.5% increase this year, as ad budgets were fattened with political advertising, the Olympic Games in Sydney, and advertising by Internet companies.

Countering the view of a slowdown in network TV advertising, David Poltrack, the head of planning and research at CBS, said he expects the increase in ad spending for all four networks to increase 7% next year.

"As we close out the year we are beginning to hear a chorus of gloom and doom speculation concerning both the short term and long t

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