Ugly Forecast For Ad Spending Through 2006

"And those numbers are, in a word, ugly." The words of advertising forecaster Jack Myers ring loud and clear today with a revised downward ad spending forecast that takes us all the way to 2006.

For starters, this year's fourth quarter looks bleak. "Having now seen the broadcast and cable upfronts play out, we see no indications that the oft-mentioned fourth quarter turnaround will occur," Myers says.

Consequently, his original prediction of a 1.5% drop in ad spending this year has been increased. He now says spending will drop 4%.

Further, he predicts a spending drop of 1.7% for 2002 and no change in 2003. The only robust year in his six-year projection is 2004, the presidential election and Olympics year that will see a 2.7% jump in spending. But then it will slow again with dips of 0.9% and 1% in 2005 and 2006.

He calls it "the industry's most bearish forecast for this year and the next several years." It follows many other forecasts that were more along the lines of his initial forecast that called for smaller dips.

He says there are many reasons for the bearish outlook beyond the familiar one of a slow economy. They include an over-supply of media inventory; a consolidation of media buyers, resulting in greater negotiating powers; setbacks in the deployment of digital and broadband technologies, resulting in slower growth; and a shift in spending from traditional media advertising to promotion.

He does predict continued growth in online spending but notes the forecasts for that growth by other firms are "overly enthusiastic." Last week, Jupiter Media Metrix called for a heavy increase in spending at its Online Advertising Forum. Earlier, Forrester Research released its own numbers, which were even higher than Jupiter's. The fact that the two firms' numbers don't come close to matching bothers Myers, who says, "I am continually astounded by the credibility given to statistics and forecasts issued by Jupiter and Forrester. The numbers being thrown around are way out of line."

He forecasts online revenue $4.73 billion this year, up 10% from last year. Annual online growth from 2002 to 2006 will be from 12 to 20%.

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