Coen Forecasts 15 Percent Growth In Online Ad Spending

Bob Coen, Universal McCann's senior vice president and director of forecasting, predicted that online ad spending will be up 15 percent to $7.8 billion this year. But, despite the predicted double-digit growth, his report wasn't all positive: online marketers have slowed down their advertising in the first quarter of this year, he said.

"A review of some of the largest and most important Internet advertisers suggested that online spending for traditional advertising on the Internet has slowed considerably," Coen said.

"For example," he added, "in the first quarter of 2004, online advertising for the retail category was up 15 percent--and in the first quarter of 2005, down 13 percent. In 2004, department stores were up 24 percent--but in 2005, down 70 percent. Since these reported numbers do not include text-only search-related services, it seems likely that monies are being diverted to these transaction-facilitating services. Advertising dollars are possibly being diverted to other marketing communication activities."

Overall, the increasing softness in American advertising spending of the past few months led the usually bullish Coen to issue a slightly downgraded forecast for total U.S. ad spending this year, revising his previous expectation from December 2004 of 6.4 percent growth--to $280.6 billion--to a projected increase of 5.7 percent, to $278.7 billion.



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