• by David Goetzl  @dgoetzl, July 11, 2006

Despite recent downward projections in ad spending growth for this year, a new survey shows CMOs are in fact planning to loosen their purse strings. CMOs on average plan to boost their ad budgets by 8 percent over the next 12 months, according to the quarterly Credit Suisse CMO survey conducted by TNS Media Intelligence.

The projected spending growth would be up slightly from the 7 percent average CMOs cited in the first-quarter survey.

The mid-year increase from those who actually apportion the dollars comes after forecasters from Universal McCann, Merrill Lynch and even TNS each lowered their 2006 projections. One caveat: The CMOs were referencing their spending plans for the next 12 months (into June 2007), while the influential forecasters were only offering guidance through this December.

The quarterly Credit Suisse CMO survey covers 100 Chief Marketing Officers, advertising agencies and other advertising decision-makers, the securities firm said.

Not surprisingly, online advertising continues to draw CMOs' attention - though with some moderation compared to three months ago -- and ranked as the fastest growing medium in the survey. CMOs on average expect to bolster online spending by 8 percent over the next 12 months, though that was down from the 14 percent they cited last quarter. Further, marketers are turning an increasing portion of their budgets over to the online arena, projecting on average they would spend 20 percent in online, up from 13 percent just three months ago.

"Survey participants revealed that Internet advertising methods proved to have the highest perceived return on investment, significantly ahead of any other category," wrote Credit Suisse analyst William Drewry, "...with the continued growth in the use of the Internet for both utility and entertainment purposes, advertisers see the value created by shifting dollars online."

Based on the survey, Credit Suisse projects 35 percent growth in online ad spending in 2006 (to $16.9 billion), and a 26 percent annual growth over the next five years.

Somewhat surprisingly, the struggling newspaper industry has not completely dropped off CMOs' radar screen. In fact, they said they would raise newspaper spending on average by 2 percent over the next year, compared to plans to decrease spending in last quarter's survey.

In the television arena, perhaps as a response to the perceived threat of digital video recorders and an interest in new media, CMOs said they planned to slow spending. Average plans call for flat broadcast spending, and a 1 percent reduction in cable. Both Universal McCann and Merrill Lynch cited weakness in the cable market, which is in the process of negotiating upfront advertising deals for the 2006-07 season.

But Credit Suisse's Drewry said the future for Big Media looks bright as companies start to shift television content and their powerful brands to the Internet arena, estimating Disney, News Corp. Time Warner (excluding AOL) and Viacom will generate more than $1 billion in Internet spending in 2006. With "rich media" growing, Credit Suisse wrote, "content drive media companies will gain market share, develop and eventually dominate the business longer term."

In the outdoor space, CMOs on average said they would bump spending over the next year by 1 percent (after suggesting category spend would be flat last quarter); figures were the same for magazines. Radio saw a slight drop to 1 percent this quarter, down from 2 percent last quarter - still, however, an increase for a sector perceived to be hurting.