"We are lowering our 2003 and 2004 U.S. and global ad forecasts, once again, to reflect weaker local ad trends this year and somewhat muted optimism next year, particularly as it relates to the newspaper group," wrote Merrill Lynch's Lauren Rich Fine in the research note, adding, "For 2003, we are now forecasting U.S., non-U.S. and global growth of 2.8% (3% excluding direct mail), 0.8% and 1.9%, respectively, down from 3.1%, 0.8% and 2.0% previously."
For 2004, the equities firm shaved three-tenths of a point off the U.S. ad outlook to 5.7% and two-tenths of a point of its global ad outlook to 4.7%.
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Merrill Lynch's Revised Ad
Forecast
2001 2002 2003 2004
Total U.S. Advertising -6.3% +2.5% +2.8% +5.4%
U.S. Advertising (Minus Direct Mail) -7.7% +2.4% +3.0% +5.7%
Newspaper Advertising -9.4% -0.5% +2.0% +4.0%
Broadcast TV Advertising
-13.2% +8.2% +2.8% +6.8%
TV Network Advertising -10.0% +4.9% +7.7% +8.0%
TV Station Advertising -16.8% +11.9% -0.9% +6.2%
Cable TV Advertising +1.8% +3.6% +9.5% +8.8%
Radio Advertising -7.5% +5.7% +2.4% +8.2%
Magazine Advertising -7.5%
-3.5% +3.0% +5.0%
Internet Advertising -11.6% -5.0% +5.0% +10.0%
Non-U.S. Advertising -8.6% +0.5% +0.8% +3.8%
Worldwide Advertising
-8.2% +1.4% +1.9% +4.7%
Source: Merrill Lynch Equity Research.
The Merrill Lynch downgrade follows several other recent mixed signals, including a turnabout in the business-to-business ad spending rebound, considered a vital lagging indicator of an overall advertising rebound.
But a MediaPost compilation of second quarter earnings results for the top 100 U.S. advertisers showed the vast majority of them exceeding their earnings guidance, which is considered a vital forward indicator for ad spending.