• by June 18, 2001

Last week, Robert Coen of Universal McCann issued his latest advertising revenue report, predicting slower growth than originally anticipated for the rest of the year. Today, Jack Myers, chief economist for Myers Reports Inc. responded to Coen’s formidable numbers with his own report.

“The Myers forecasts reflect a slightly more negative outlook than the spending projections recently released by Coen,” Myers says.

The new research suggests that the economic slump in the media industry may have bottomed out, although a recovery remains 18 months away.

According to Myers, the company's third quarter Advertising Confidence Index (ACI) shows a slight increase from March, indicating stabilization in media budgets, following a 24% drop in the ACI between December 2000 and March 2001.

The Advertising Confidence Index, compiled quarterly by media industry economic researcher Myers Reports, is based on a survey of 152 advertiser and ad agency executives responsible for media planning or buying decisions. It is a weighted number derived from the percentage of those executives who said they plan to either increase, decrease or maintain their overall media spending plans over the next 12-18 months.

On a scale from 1-100, here's how the last three months compare:
December 2000 -- 67.1
March 2001 -- 48.4
June 2001 -- 49.4

For the third quarter, there is a far greater degree of confidence in the growth of direct marketing and consumer and trade promotion, which rate a confidence index of 65.9. Nonetheless, the direct marketing and consumer and trade promotion confidence index was higher in March, at 66.1, and in December 2000, at 72.4. Myers' promotion index includes assessments of seven promotion and direct marketing categories.

"Based on the results of the third quarter ACI," said Myers, "we are not revising our media spending forecasts for 2001 and 2002, which we published in May. The Myers forecasts reflect a slightly more negative outlook than the spending projections recently released by Universal McCann's Robert Coen. While Coen dramatically downgraded his projections for several media from his original 2001 forecast, issued in December 2000, his updated numbers are consistent with Myers' projections for several media."

For all consumer media in 2001, Myers projects an overall decline in media spending of 1.5%, and an increase of 0.2% in 2002. Coen's numbers for 2001 and '02 are +2.5% and +5%, respectively.

However, Coen includes direct marketing revenues in his forecasts, which Myers excludes. Without direct marketing growth incorporated, Coen's adjusted forecast for 2001 would be +1%.

As far as individual media numbers go, Myers calls for network TV spending to drop 3%, spot TV to fall 15% and syndication down 5%. Only cable TV will grow, up 8%. Myers predicts radio will fall 6% while magazine and newspaper will grow by .5 and 1.5% respectively. Online advertising, according to Myers, promises the biggest growth, at 40%.

While the ACI shows stabilization in media spending plans, it appears that a recovery is still nearly 18 months away, according to survey respondents.

"If we are heading into an economic downturn for the media industry, how long will it take before it recovers?"

By mid-year 2001 -- 0.8%
By year-end 2001 -- 20.5%
By early 2002 -- 25.0%
By mid-year 2002 -- 32.6%
By year-end 2002 -- 16.6%
Beyond 2002 -- 4.5%
- Source: Myers Reports Advertising Confidence Index

The report shows that media executives believe that the average number of months for media economy recovery is 17.5. Additionally, 10.1% of respondents do not think we are heading into an economic downturn for the media industry. The majority of survey respondents, however, cited the following as reasons for worsening conditions in media marketplace:

* Macro economic (development in the nation's/world's economy) -- 55.0%
* An adjustment to accelerated spending over the past 12-18 months -- 35.6%
* Micro economic (related to specific media sectors) -- 24.8%
* Cyclical (related to normal, historical ad spending patterns) -- 24.8%
* Subjective economics (related to my company) -- 19.5%
* Other -- 4.7%
* Do not believe media marketplace conditions are worsening -- 12.8%
- Source: Myers Reports Advertising Confidence Index