Commentary

Elections, Olympics and Soccer to Boost Advertising in 2004

Elections, Olympics and Soccer to Boost Advertising in 2004

According to the latest report from ZenithOptimedia, advertising spending in North America should surpass $154 billion this year, and grow to over $176 billion by 2006. The report, from John Perriss, Chief Executive at Zenith, offers experienced logic for the growth.

Advertising Expenditure Major media (newspapers, magazines, television, radio, cinema, outdoor, internet)
US$ million, current prices.

 20022003200420052006
North America$149,681154,178161,962168,722176,018
USA$144,463148,786156,389162,976170,102
Canada$5,2185,3925,5735,7465,916

Source: ZenithOptimedia

On the assumption that the US presidential election will generate at least $1 billion in extra advertising, the 2004 summer Olympics might generate another $1billion in worldwide TV spot advertising revenue, and the European soccer championships $0.5 billion, this $2.5 billion would represent 17% of the $15 billion growth we expect in 2004.

Another effect is the movement of funds into TV from other media. In 2004, the report expects TV worldwide to add 0.6% share of display advertising compared to its long-run annual average 0.4% addition. And, the study predicts that newspapers will as usual lose most share in 2004: -0.4% against a long-run annual average of -0.6%. This is almost bound to be permanent, since 1989 was the last year newspapers added share.

Total ad spending in the U.S. advertising marketplace across 11 measured media for the first half of 2003 is 7% higher than the same period a year ago. The nation's largest advertisers are driving this growth, with a combined spending increase of 16%. The current financial picture for most of these companies is generally good, which speaks to a strong 2004.

The 2003-2004 network TV upfront reportedly reached as much as $9.2 billion, well above the projections in early May, and 12% up on 02-03. CPM (cost-per-thousand) is reported to average in the mid-teens, a result of strong demand coupled with declining supply, reflecting the broadcast networks' declining viewership as cable takes away more of its audience. Most growth is coming from pharmaceutical and retail.

Newspapers continue to experience modest growth. Efforts by the Newspaper National Network to draw more national advertising through trade advertisements and broad and relevant advertiser marketing programs is likely to gain some momentum in 2004. Unfortunately, national advertiser spending contributes only a small percentage to total newspaper advertising levels. However, new money from political advertising will help in 2004.

Find out more here.

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