• by Erik Sass  @eriksass1, July 3, 2007

Zenith Optimedia is predicting slow but steady growth in total advertising budgets for 2007, with a 3.7% increase over last year. While encouraging, this figure is at odds with other recent predictions from industry analysts at TNS and Universal McCann. According to Zenith, however, some individual media are set for declines.

The Zenith forecast has network TV spending down 1.7%, spot TV down 1%, and newspapers flat through 2007. On the upside, Zenith forecasts a 3.5% growth in direct mail, 4.6% growth for consumer mags, 6% growth in cable TV, 6% growth in outdoor, and 29% growth in the Internet. Nontraditional out-of-home, including place-based video networks, are expected to grow 15%, and cinema advertising the same.

Looking back over the first quarter, Zenith found the top 10 ad categories grew just 0.5%, compared to the same period last year, with some industries posting substantial declines. Communications fell 7.4% in the first quarter, insurance and real estate were down 5%, and public transportation, hotels and resorts fell 4.9% Pharmaceuticals, on the other hand, grew 11.4%.

A more conservative forecast from TNS has overall advertising growing just 1.7%. Within this estimate, TNS expects network TV to grow 1.3%, spot TV to fall 5.5%, cable to rise 5.9% and the Internet to rise 16%.

Zenith blamed the sluggish ad growth on a general deceleration in the U.S. economy in the first quarter of 2007, largely due to the continuing slump in housing, a slowdown in government spending and a decline in business inventories. Summing up, its analysts noted that gross domestic product grew at an annual rate of 0.6% in the first quarter, just one-quarter of the 2.5% growth rate in the same period last year. On a more positive note, the consumer confidence index increased in April to 108 (compared to a base of 100 in 1988, when it was first measured), a 2.3% increase over April 2006. The unemployment rate held steady at 4.5% from April to May.