• by Paul Gough , November 27, 2002

A new study predicts that advertising spending will increase in the new year, with a 6% increase by the end of 2003.

“Outlook for Advertising and Media” was released Tuesday by Global Insight Inc. It says the big winners in the U.S. media market in the next four years will be radio, cable television and the Internet; newspapers, outdoor and broadcast TV will see more modest growth.

Global Insight principal John Rose says that the turnaround will be led by large corporations that in this recession, unlike others, have been shedding inventory and employees and are now poised to see growth in their corporate bottom lines as the economy improves. They will also lead to more money available for marketing, which according to a Nielsen Monitor-Plus report has already happened with increased media spending from such big companies as General Motors and Pfizer.

“They’re really poised to take advantage of any improvement in profit sand sales,” Rose says.

Between now and 2006, radio will see a 10% annual increase in ad spending. Cable TV will see a 7% annual rise through 2006 and the Internet will see a 16% increase, Global Insight said. But don’t go celebrating just yet; Rose said the increase will only bring the new media’s piece of the overall ad market from today’s 2% to about 3%. Leading categories include entertainment, wholesale trade and the services sector.

In the near term, Rose said broadcast TV would continue its growth led by this season’s upfront and national newspapers would see a recovery in their market following an expected recovery of the financial services industry.

Rose said Global Insight predicts the economic recovery will be soft in the first half of 2003 and “the rest of the year won’t be gangbusters either.” But he sees corporate profits improving by 18% next year.

“That’s very, very good news for advertising and advertising expenditure,” Rose said.

Although Rose said that radio had a tough year in 2002, significant consolidation in the industry has made it much easier to conduct national advertising campaigns and 2003 will be much better. Cable’s growth will be reflected in its new product offerings, which Rose said will allow them to rachet up their CPM rates and bring them a little closer to broadcast. There will be growth in network TV, Rose said, and CPM will creep upward, more a function of supply than anything else.