Amid Dueling Forecasts, Aegis Also Sees An Ad Expansion

Lost in the shuffle of higher-profile ad spending forecasts, the head of the world's largest pure-play media agency Monday also said it's seeing ongoing evidence of a turnaround in the United States, although the change is taking place more slowly in Europe, its biggest market.

"While it's not been a fabulous year, it has been a good year," said Doug Flynn, chairman and chief executive officer of Aegis Group PLC, the London-based holding company that owns Carat. The $2 billion company has 54 percent of its business in media, compared to 34 percent in research and 14 percent in communications planning. Yet 59 percent of its business is in Europe, with only 31 percent in the United States and 10 percent in the rest of the world.

That's an important distinction, since business in Europe has been nothing to write home about. Yet based on the strength of the TV upfront and strong growth in Gross Domestic Product (GDP), Flynn said that advertising spending would finish the year with a 3.4 percent increase in the United States, and predicted that it would be up 4.7 percent in 2004. Flynn said that the growth in the United States next year would be the result of the presidential election, an increase in corporate investing in revenue growth, and competitive pressure in the marketplace.

Flynn said that in the second half of 2003, corporations have become more interested in investing for topline growth. He said leaders have already begun to do this, and other companies are forced to follow to avoid being left behind.

"Things are looking a little better. It's a slow, somewhat uncertain climb," Flynn said.

Also uncertain is the research business, for which Aegis said it didn't have data available for 2003. But Flynn said Aegis believed that underlying growth would be low in 2003, at around 2 percent. While the consumer packaged goods research sector seems to be recovering, automotive research was flat to down, health care was seeing some recovery, and technology research remained anemic. Flynn said that research doesn't seem to be as susceptible to recession as media buying and marketing.

"The flip side to that is that [it] doesn't come out [of recession] growing robustly," Flynn said. He said that research doesn't appear to have more than modest growth in 2004.

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