• August 26, 2004

The Merrill Lynch equities research team once again revised its ad outlooks for 2004 and 2005. In a research note sent to investors Thursday morning, the team revised its 2004 U.S. ad outlook down to a growth rate of 6.5 percent from an earlier projection of 6.6 percent, while 2005 was taken down to 5.2 percent from 5.5 percent. The global ad spending outlook remains stable at 5.5 percent for 2004, but was revised down to 4.9 percent from 5.0 percent for 2005. The securities firm said U.S. agency margins remain "under pressure" due to new compensation methods. Nonetheless, the analysts said ad agency stocks remain one of the more promising investments in the media industry: "As we look across the media landscape, not only do we believe the ad/marketing service sector is interesting from a thematic point of view, as the holding companies are relatively indifferent as to whether a client chooses media or marketing, but valuations are compelling as well."