Coen, senior VP and director of forecasting at the agency, stated in his mid-year update that the expected expansion in advertising had stalled in the first quarter of the year. He cited a decline in TV revenues vs. 2002 when compared to events such as the Olympics and elections. He found bright spots in revenues for cable, syndication, magazines, and direct mail ad campaigns.
Coen did find some bright spots on the horizon.
"Our expectation for U.S. advertising by national marketers is not much different than it was at the end of last year, but spending by local marketers is still very sluggish," Coen said. "Classified newspaper revenues continue to be held down due to the weakness in classified help wanted advertising, and the pace of retail advertising growth is slower than we had expected at the end of last year. By the end of this year we expect advertising spending by both national and local marketers to be considerably more robust than in recent months. The improving U.S. ad trends in the second half of this year are expected to continue and to build in 2004."
By the numbers Coen expects the overall US market to grow by 4.3 % this year. That's down from a 5 percent hike delivered in Coen's December 2002 outlook. In 2004 Coen sees a 6.5% jump over 2003. By media, expect broadcast TV to be up 4%, cable up 10%, radio up 4%, magazines up 7% and newspapers up 5.5%.
In terms of categories, toiletries/cosmetics was the overall increase winner, and seems to be fueling business across the board. The category is up 26 % for broadcast networks and 17 % at magazines. Magazines received 32% bumps from two categories, pharmaceuticals and automobiles. Pharmaceuticals lent considerable weight to Q1, with a 22% overall gain. Automobiles were up 11% overall. The only category to register a drop, according to the report, was beverages/snacks at 4%.
Broadcast TV revenue was down 6.5% in Q1. Coen attributed that in part to a strong Q1 in 2002. He also said concerns about the Iraqi war and the absence of high-priced scatter sales contributed to the decline. Cable was quite a different story. It started the year with a 20.5% jump. "If the advance upfront orders from cable ads in the upcoming season even partially play out, the cable TV network revenue gains in calendar year 2003 will be outstanding," Coen stated.