• by Joe Mandese , December 6, 2004

A significant majority - 59 percent - of advertisers expect to boost their ad spending in 2005, nearly the same rate (61 percent) that had such plans coming into 2004, according to results of an annual poll of advertisers released Friday by Merrill Lynch's equities research department. In general, the rate of increase among these advertisers is expected to be moderate with 43 percent indicating a range of between 1 percent and 5 percent and only 16 percent indicating plans to increase by more than 5 percent.

More than two-thirds of the respondents cited the Internet as the fastest growing segment of their ad budgets, followed by cable TV. Only 3 percent of the advertisers said they planned to boost their newspaper ad budgets, while 30 percent said they slashed their newspaper ad budgets.

"Magazines and radio also saw declining influence in ad budgets, with 31 percent of respondents reporting decreased spending on magazine advertising as a percentage of total ad spend and 26 percent reporting decreased spending on radio as a percentage of the total," said the Wall Street firm.

In keeping with the push toward total marketing communications, nearly two-thirds (63 percent) of respondents said they planned to increase non-traditional marketing budgets over the next year.

Among the major advertising categories, Merrill Lynch predicts the greatest overall expansion would be experienced by the media category itself, which is projected to boost its ad spending by 10.0 percent in 2005. The slowest rate of growth is projected to be among telecommunications advertisers, which will be flat in 2005. The overall rate of growth among the top ad categories is expected to be 4.3 percent.

2005 Share Of Ad Spending, Rate Of Growth

                % Of 2005     Rate Of 2005 
                  U.S. Ad      Ad Spending 
                 Spending   Growth Vs. '04 
Auto
17%           +6.1% 
Other Retail           10%           +4.0% 
Consumer Products       6%           +4.0% 
Media                   6%          +10.0% 
Pharmaceutical          5%
+4.5% 
Financial Services      5%           +4.8% 
Telecom                 5%           +0.0% 
Retail - Broadline      4%           +1.5% 
Food                    4%           +2.0%

Beverages               3%           +7.4% 
Computers & Software    2%           +3.0% 
Other                  34%           +3.3% 

Weighted Average        NA           +4.3%

Source: Merrill Lynch.