• by Ken Liebeskind , June 14, 2001

Every six months, Robert Coen, senior VP and director of forecasting for Universal McCann, reviews ad spending numbers. Today's review, at the University Club in midtown Manhattan, forecast a continuing downturn.

Revising numbers from last December's projections, Coen predicted a growth rate of 2.5% for the full year 2001. That means ad spending growth will slow down to its lowest level since the recession of 1991.

Coen's original forecast was for a 5.8% jump. He predicts $249.8 billion will be spent on advertising this year, compared with $243 billion last year.

The drop in ad spending stems from the general economic decline, which can be seen in low GDP numbers. "When the growth of the economy moves down, you can't sustain ad growth," Coen said. "The economic climate hasn't turned around, so we have to issue a revision in a downward direction."

The biggest drop is in national advertising, which had seen strong gains last year of over 20% for some product categories. The biggest national advertiser, automobiles, saw the second biggest drop in Q1 2001--7%. Only toiletries and cosmetics dropped more--11%.

Coen reviewed spending in all major media. While cable TV revenue continues to grow this year because of its niche programming opportunities, Coen said network TV dropped 2% early in the year and national spot TV dropped 18.4%. For the full year 2001, Coen predicts network TV will fall 2.5% and spot TV 6%, while cable jumps 8%.

Small gains of one to two percent are predicted for newspapers, magazines and radio for the full year, even though they have reported drops for Q1, with spot radio the biggest loser at 20%.

A 5% growth in local advertising had been predicted last December, but Coen revised that figure to 3.1%, largely because of a severe drop in newspaper classified and local spot TV.

Coen also focused on dot.com advertising, which dropped 40% in Q1 this year. It was a shocking turn around for a category that had shown huge growth over the past two years, with gains of over 400% for individual quarters. He spoke of the demise of the dot-coms in traditional media, noting the dramatic drop in spending there, compared with online spending, which continues to grow. Dot.com spending began its decline in Q4 last year, with a 15% drop, the first drop after many steady quarters of growth.

The only good news was a rosy prediction for 2002. Coen predicts a 5% gain in ad spending, spurred by general economic growth.