Zenith On Ad Spending: 'Best Prospects' Since '00; Merrill Also Boosts Outlook

On the eve of an important media industry conference in New York this week, two prominent ad forecasters issued revised outlooks boosting their expectations for ad spending in 2004. One of the forecasters, Publicis' ZenithOptimedia Group described it as the "best prospects for advertising since 2000," the ad industry's greatest year on record.

The other, Wall Street firm Merrill Lynch, noted that the ad industry is growing in line with the overall U.S. economy and boosted its expectations for 2004 ad spending growth by half a percentage point from 6.3 percent to 6.8 percent.

ZenithOptimedia raised its 2004 outlook citing "double-digit corporate profits and well-above-trend 4.7 percent global economic growth" as reasons that worldwide ad spending in 2004 will rise 6.9 percent over 2003. The U.S., the agency predicted, would rise at a somewhat more moderate rate of 6.0 percent in 2004.

Several other important industry forecasters, including Universal McCann's Bob Coen and CBS' David Poltrack, will issue updates of their 2004 and 2005 ad forecasts later today.

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As for 2005, Merrill Lynch equities research analyst Lauren Rich Fine actually lowered her outlook slightly from an earlier forecast, but raised its expectations for 2004. "We think traditional media investors are going to be hard pressed to get excited about revenue momentum in the various mediums in 2005," she warned in a report issued on Friday, which noted, "as the slower growth is only in part due to tough comparisons created by political spending and Olympics, which likely added 0.5% to overall growth." As a result, Fine lowered her 2005 forecast to an ad spending growth rate by half a percentage point to 4.6 percent from her previous estimate of 5.1 percent.

For 2005, ZenithOptimedia now expects worldwide ad spending to rise 5.0 percent and U.S. ad spending to increase 4.2 percent.

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