'05 Ad Outlook Mixed, But Generally Up

If the experts are right, U.S. ad spending should rise about 5.1 percent in 2005, according to a consensus of new forecasts compiled by MDN. That average, which reflects a range of 2005 ad growth estimates from ZenithOptimedia's +4.2 percent to Universal McCann's +6.4 percent, compares with a 2004 consensus of +6.7 percent for U.S. ad growth. At that rate, the ad industry would fail to match the projected expansion in the overall U.S. economy in 2005, which is expected to see the U.S. gross domestic product grow by 5.5 percent.

But the advertising picture could be even worse depending on who's looking at it. While Aegis Group, the parent of Carat, did not update its outlook, CEO Douglas Flynn said the company expects U.S. ad spending in 2005 to be "down relative to 2004." Flynn made that comment during a presentation at UBS' annual Media Week conference in New York, where a number of the new outlooks were disclosed.

And while WPP Group, the parent of Mindshare and Mediaedge:cia, also did not release an explicit forecast, CEO Sir Martin Sorrell warned that U.S. ad spending could tumble next year due to the instability of the U.S. economy and that in turn could impact the worldwide advertising marketplace.

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"A negative factor next year will be what's happening in America, whether the economy will be under control," said Sorrell, emphasizing, "When America sneezes, we all catch a cold."

The outlook was equally mixed for worldwide ad spending. Universal McCann projected it would rise 6.1 percent in 2005 on stronger spending from overseas markets. ZenithOptimedia projected it would increase 5.0%, while Merrill Lynch thinks it will climb 4.5%.

U.S. Ad Spending: Consensus Outlook


2004 2005 2006 2007
Merrill Lynch +6.7% +4.8% NA NA
Universal McCann +7.4% +6.4% NA NA
ZenithOptimedia +6.0% +4.2% +5.3% +5.2%

Consensus +6.7% +5.1% NA NA

Source: Company reports.
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