Top Product Categories Lead Ad Recovery

Led by increases in ad spend by top companies and product categories, the U.S. advertising market appears poised to continue its recovery in 2003.

Reports by ZenithOptimedia and Universal McCann released Monday both predict year-to-year overall growth, although at varying rates. Universal McCann predicts an overall rise of 5% in the United States, while Zenith forecasts a 1.9 % increase.

“A year ago, things were pretty bad and many of us doubted that we would likely ever crawl out of the hole,” says Universal McCann’s Robert Coen. But the advertising market improved more than expected with a robust TV upfront and upticks due to the Winter Olympics and midterm elections in 2002.

Coen’s Insider Report forecasts U.S. advertising rates will in 2003 move above the boom levels of 2000. The 5% gain will bring U.S. advertising to a total of $249.3 billion in 2003.

Product categories that have led the way in 2002 include automobiles (up 10%), movies (up 6%), toiletries/cosmetics (up 9%), restaurants (up 6%) and beverages/snacks (up 4%). The top-spending categories account for about half of all advertising spending in national networks, cable, syndicated TV plus spot TV and magazines.



Among what Coen calls secondary categories, beer/wines rose 22% for the first nine months of 2002 compared to a year ago. Telecommunications rose 8% during the same period, with resorts/tours up 9% and insurance down 5%. Apparel and airlines fell 5%.

Even the ad spending, which had been ravaged by the bottom falling out of the Internet, may recover within the next year or so and certainly won’t drag the market like it has in 2001 and 2002. “The turnaround is going right through most of the market,” Coen said.

Zenith reports that this year’s biggest advertiser remains General Motors Corp., although its overall spend is down 2%. Procter & Gamble, AOL Time Warner Inc., Ford Motor Co. and DaimlerChrysler AG rounded out the top five, with only DaimlerChrysler down among them.

“It [the growth] seems to be coming from the sort of endemically strong categories,” said Rich Hamilton, president of Zenith Media USA. New product activity at Proctor & Gamble helped lead it to a 20% increase in ad spend according to ZenithOptimedia and Verizon’s strategy in a still-torrid telecommunications sector saw its ad spend jump 33% compared to 2001, he said. Entertainment is another strong category, Hamilton said.

“TV and radio are leading the charge. The magazine business seems to be continued soft,” he said.

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