• by Ken Liebeskind , August 5, 2002

The 16th annual Communications Industry forecast from Veronis Suhler Stevenson released today, projects a slight comeback for ad spend in the second half of 2002 and larger but moderate gains through 2006.

For 2002, VSS projects $177 billion in total ad spend, a growth of 2.9% from last year. The growth comes after last year’s drop in spending of 6.2%.

The gains can be attributed primarily to TV and radio, VSS says. TV benefited from a strong upfront plus projected Olympics and election spending. Network spending will jump 4.1% this year to $42.9 billion. There will be even greater growth in cable and satellite TV, with a 9.5% jump to $76.9 billion.

Radio has also shown significant growth, thanks to aggressive marketing by the major radio groups. Local ad spending will jump 3% to $14.6 billion while national radio will grow 4% to $3.2 billion.

The print media is much more stagnant, with business to business magazines suffering the most, according to Leo Kivijarv, director of research and publications at VSS and the editor of the forecast. “B to B got whacked last year and we’re still predicting negative growth this year,” he says. “It’s because they base buys on different confidence levels. For TV and radio, they spend when consumer confidence grows, while B to B spends when they see CEO confidence. Those levels rise when profits rise, but they’re lagging now.”

VSS projects slight newspaper growth for the year, up 3.2% to $52.3 billion. Kivijarv attributes the growth to local advertising, which continues during economic slumps.

Online advertising will be up 4.1% this year, much better than last year’s 11.9% drop, but not nearly as good as the past five years when the Net was surging. Growth is due to the fact that advertisers are getting away from banners and trying new formats and low price points, Kivijarv says. The slow growth is “not very good, but still positive."

VSS annual forecasts project spending for the next five years and calls for an annual growth rate of 5.5% through 2006. “It’s not as bullish as the last five years,” Kivijarv says. “We compare it with the middle ‘90s in terms of growth, the pre-Internet years. We are not seeing any new advertising dollars coming into the marketplace. In the past five years there was Internet marketing and telecommunications that brought in new dollars. Now it’s a battle of hoping marketers will add to their budgets and different media battling for shares instead of new dollars coming in.”