• by Joe Mandese  @mp_joemandese, October 1, 2003

Sending yet another mixed signal for the ad spending outlook, the ad industry equities research team at Merrill Lynch Wednesday issued a report revising the firm's advertising forecasts down from earlier predictions. The move follows a modest upward revision made recently by Zenith Optimedia Group, as well as a MediaPost survey of media planners and buyers that pointed to a markedly lower traditional ad spending outlook for 2004 than those issued by major forecasters including Zenith and Universal McCann.

"We are lowering our 2003 and 2004 U.S. and global ad forecasts, once again, to reflect weaker local ad trends this year and somewhat muted optimism next year, particularly as it relates to the newspaper group," wrote Merrill Lynch's Lauren Rich Fine in the research note, adding, "For 2003, we are now forecasting U.S., non-U.S. and global growth of 2.8% (3% excluding direct mail), 0.8% and 1.9%, respectively, down from 3.1%, 0.8% and 2.0% previously."

For 2004, the equities firm shaved three-tenths of a point off the U.S. ad outlook to 5.7% and two-tenths of a point of its global ad outlook to 4.7%.

Merrill Lynch's Revised Ad Forecast

                                     2001    2002    2003       2004 
Total U.S. Advertising                -6.3%   +2.5%   +2.8%      +5.4%

U.S. Advertising (Minus Direct Mail)      -7.7%   +2.4%   +3.0%      +5.7% 
Newspaper Advertising                -9.4%   -0.5%   +2.0%      +4.0% 
Broadcast TV Advertising
-13.2%   +8.2%   +2.8%      +6.8% 
     TV Network Advertising                  -10.0%   +4.9%   +7.7%      +8.0% 
     TV Station Advertising          -16.8%  +11.9%   -0.9%      +6.2%

Cable TV Advertising                +1.8%   +3.6%   +9.5%      +8.8% 
Radio Advertising                     -7.5%   +5.7%   +2.4%      +8.2% 
Magazine Advertising                  -7.5%
-3.5%   +3.0%      +5.0% 
Internet Advertising               -11.6%   -5.0%   +5.0%     +10.0% 
Non-U.S. Advertising                -8.6%   +0.5%   +0.8%      +3.8% 
Worldwide Advertising
-8.2%   +1.4%   +1.9%   +4.7% 

Source: Merrill Lynch Equity Research.

The Merrill Lynch downgrade follows several other recent mixed signals, including a turnabout in the business-to-business ad spending rebound, considered a vital lagging indicator of an overall advertising rebound.

But a MediaPost compilation of second quarter earnings results for the top 100 U.S. advertisers showed the vast majority of them exceeding their earnings guidance, which is considered a vital forward indicator for ad spending.