World Cup Fails To Reach Goal, Ad Outlooks Lowered

New mixed signals emerged for the U.S. and world advertising economies as a number of influential industry sources downgraded their outlooks. Among the most troubling: Aegis Group, the parent of Carat, reduced its global ad estimates for 2006, due largely to a lower-than-expected stimulus from the World Cup in Europe. Domestically, Wall Street firm Merrill Lynch lowered its estimates for the 2006-07 network upfront ad marketplace (see related story in today's MediaDailyNews), while the New York Times Co. issued new guidance to shareholders warning of weaker than projected second quarter earnings due to a continuingly challenging ad marketplace.

One bright spot continues to be digital media, which was cited by both Aegis Group and the New York Times Co. as remaining healthy.

"Internet advertising continues its impressive growth and is boosting overall spend with a 25 percent year-on-year increase worldwide in 2006," predicts Aegis' revised outlook, which goes on to project that Internet ad spending would overtake ad spending in newspapers by 2008. Aegis noted that the Internet ad market has already surpassed newspapers in the U.K., and is poised to "outstrip" magazines this year.

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"For early adopters like Sweden and South Korea, internet will become the third biggest advertising medium this year, after TV and newspapers," the media agency holding company predicted.

Another bright spot in Aegis' outlook is the U.S. marketplace. Despite downward revisions by certain media, Aegis maintained it 2006 U.S. ad growth rate at 5.0 percent, citing healthy TV ad expenditures, especially for Spanish-language TV and local political TV ad campaigns. "We revised our European forecast down a little," Aegis said, "This is primarily because of the U.K. where so far the boost provided by the World Cup is not as strong as anticipated, and Italy where the economy remains fragile." Aegis reduced its European ad growth estimate to 4.5 percent for 2006 from 4.8 percent previously.

Asia Pacific estimates were also downgraded to a growth rate of 6.4 percent from an earlier forecast of +7.2 percent, despite a slight upward revision for China.

As a result, Aegis reduced its 2006 global out growth estimate to +5.7 percent from its earlier estimate of +5.8 percent.

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