Advertisers Upbeat On Spending For Next Six Months

by Joe Mandese, Dec 15, 2006, 5:00 AM

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Weeks after some of Madison Avenue's leading forecasters released revised--and generally moderate--outlooks for U.S. and worldwide ad spending for the year ahead, new research reveals that advertisers and agency media executives are generally upbeat on their spending plans for most of the major media over the next six months.

The findings, which come from the just-completed fall wave of Advertiser Perceptions' survey of 2,400 media decision-makers, reveal growing confidence on their spending plans for all media--with the exception of radio and local newspapers. Perhaps most interesting of all, a slightly higher percentage of the ad executives plan to increase their budgets for TV than for online media.

That last point is consistent with estimates being released by the major ad forecasters, which indicate that despite the high rate of double-digit growth coming from online media, TV continues to be the biggest single contributor of the growth in overall advertising spending.

TV, for example, is projected to contribute 46% of the overall increase in North American ad spending and 50% of worldwide ad spending next year, according to the latest edition of "This Year, Next Year: Worldwide Media and Marketing Forecasts," released Wednesday by WPP's GroupM unit. The Internet, will be the second-biggest factor, contributing 41% of the North American ad expansion, and 28% of the global ad expansion in 2007. Outdoor will actually be the third-biggest contributor (7%).

One factor fueling television's growth in the U.S. marketplace is the rapid expansion of Spanish-language television, which is actually growing faster than online display advertising in the market. In addition, the U.S. TV marketplace continues to expand via growth in new and emerging outlets, as well as new brands using the medium.

However, GroupM predicted: "It is just a matter of time before internet regains its position" as the dominant contributor to the U.S. advertising expansion.

Another factor slowing the Internet's contribution, according to some observers such as TNS Media Intelligence's Steven Fredericks, is that online advertising costs are generally more efficient than the old media they are substituting in advertising budgets--meaning that advertisers don't need to spend as much as they had been before to generate the same kind of results.

Whatever the precise factors influencing ad spending sentiment, the pattern is clear according to the Advertiser Perceptions study. Nearly a third (31%) plan to boost their TV ad spending over the next six months, versus only 29% who plan to increase it for online media, and 25% for print media.

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