• by John Gaffney , April 7, 2003

It's the category, stupid. That paraphrasing of Bill Clinton advisor James Carville could summarize the Zenith Optimedia ad spend forecast released yesterday, which was slightly optimistic for domestic spending, but more dull for the rest of the world.

"There are still a lot of categories like telecom where there are a lot of aggressive things being done," said Zenith North America chief executive Rich Hamilton. "And don't forget you have categories like automotive where if sales get soft, they will increase advertising to make up the difference."

That is part of the reason Zentih's research raised its Q1 forecast from a 1.9 to a 2.2 % growth rate. A minor increase, but an increase that becomes very important when the geopolitical situation is marked by American and British tanks rolling into the streets of Baghdad.

That overseas factor is addressed in the report. "We qualify our forecast with the risk that prolonged war would gravely damage advertiser confidence. A swift conclusion would do the opposite, and in particular make an already firm upfront market tighter still. 2003 scatter in network, cable and syndication also remains firm despite consumer/stockmarket weakness. Auto, retail, refinance and real estate stand out. We have revised all national TV media up 2003-2005."

Hamilton said his company's forecast is on the lower end of the spectrum that has been projected by Universal McCann and Merrill Lynch. Still, he respects the job by some major corporations that are leading major categories in advertising. A.G. Lafley, he says, has done an exemplary job running P&G, and all companies have benefited from that skill, he said.

On a global basis, the Zenith report depicts and consumer business and advertising climate stuck in the doldrums. It predicts world economic growth at 2.2% this year and 2.8% next; the 1995-2002 mean was 3.5%. Consumer demand growth is forecast at 2.2% and 2.4% (historic mean: 3.5%). World advertising's mean annual change 1995-2002 was 5.3%; it is known for its volatility relative to underlying economic trends. Since the ad recession of 2001/2 our forecasts portray advertising uncharacteristically becalmed. This essentially bearish view of advertising shadowing rather than running ahead of economic growth is reinforced by mounting evidence of the wider 'absence of decent recovery' in this very economic growth. Weak corporate confidence, and the expectation that it will remain so, is probably doing most to stunt advertiser sentiment.