Merrill Lynch Forecasts Reduction In 2006 Ad Spending

by David Goetzl, Jun 30, 2006, 7:00 AM

• Comment
• Recommend (1)
• Tweet
• 

A day after Universal McCann guru Robert Coen lowered his projections for 2006 U.S. ad spending, Wall Street firm Merrill Lynch joined him in a reduction--becoming the third influential forecaster to do so at mid-year.

Merrill Lynch decreased its projections to 5.1 percent growth after forecasting that U.S. ad spending would increase at a 5.3 percent rate. Coen downgraded his estimates from an initial 5.8 percent to 5.6 percent ($286.4 billion), partly due to softness in cable television--also a factor in Merrill Lynch's revised forecast.

Citing a slow cable upfront, Merrill Lynch reduced its projected growth in cable from 10 percent to 6 percent. Based on only a 1.4 percent increase in national cable during this year's first quarter, Coen had reduced his growth forecast from 7 percent to 4.5 percent. The slower cable growth so far this year comes despite hundreds of hours of Winter Olympics coverage on NBC Universal networks USA, MSNBC, and CNBC.

Still, Merrill Lynch projects cable networks' 6 percent growth in 2006 to outperform an expected 4.3 percent jump among the broadcast networks.

Other Merrill Lynch projections for 2006 include 29.1 percent growth in Internet advertising, but the firm forecasts that the newspaper (1.2 percent growth) and radio (1.9 percent) markets will move in slow gear.

TNS Media Intelligence also recently revised its overall 2006 projections, reducing them more dramatically than either Coen or Merrill Lynch. TNS had projected that the U.S. ad market would grow by 5.4 percent, but altered that to 4.9 percent. Media agency Carat has maintained its forecast of 5 percent growth.

On Wednesday, Coen, the director of forecasting at Universal McCann, offered up an early robust outlook for 2007--predicting 5.8 percent growth (to $303 billion). But Merrill Lynch wrote "as is often the case, we think Coen is overly optimistic," and projected a more moderate 3.5 percent growth on Thursday.

Coen's bullishness was based, in part, on a belief that conservative advertisers in prominent categories would loosen the purse strings next year and "offset the normal odd-year slowdown" that comes with no Olympics or federal political campaigns.

"I think there's a lot of pent-up ad spending ready to break loose," Coen said. "The super-cautiousness marketers have been displaying the last couple of years is bound to disappear."

More proof that Merrill Lynch disagrees: It projects that spending on the broadcast networks will decline by 2.2 percent next year, even as it forecasts moderate growth, but increases nonetheless, in the struggling newspapers and radio sectors.

• Comment
• Recommend (1)
• Tweet
• 

Be the first to comment on "Merrill Lynch Forecasts Reduction In 2006 Ad Spending "

Leave a Comment