• by Joe Mandese  @mp_joemandese, January 6, 2004

Demand for advertising inventory in the major media, which had been building throughout 2003, soared in the final month of the year, according to a MediaPost survey of media planners and buyers. More than half of the respondents (55 percent) surveyed online in December by InsightExpress said they believed their demand for advertising had increased relative to December 2002, marking the first time that year that a majority of the industry felt that way.

In September, the last month the MediaPost Advisory Panel was surveyed on the topic, only 44 percent had increased ad demand expectations, though that month was up considerably from August when only 39 percent cited increased ad spending plans.

The findings are consistent with a progression of improving advertising demand indicators, including upbeat revisions by advertising forecasters and, perhaps more importantly, increased profitability by most major national advertisers.

Ad Demand Continues To Trend Upward

                 August   September   December   Dec. Vs. Sept.  
Increased:         39%       44%        55%          +11 points  
Stayed The Same:   43%
49%        39%          -10 points  
Decreased:         18%        7%         6%           -1 point  

Source: December and September 2003 MediaPost survey of media planners and buyers conducted online by InsightExpress. Base: September = 226 respondents; December = 195 respondents.

On Monday, for example, the highly respected equities research team at Merrill Lynch issued a new report calling for "muted optimism" for the major ad-supported media. "As confidence regarding a sustainable economic recovery builds, we think marketers will launch new products and be more inclined to support brands with increased ad budgets," said the report, adding that ad agencies would participate in the overall growth, but that their profit margins would continue to be held in check due to increased pressure on compensation and increased oversight from advertising auditing firms.

Merrill Lynch noted that it has revised its forecast for 2004 U.S. ad spending growth to 5.8 percent from a previous forecast of 5.4 percent.

But if the current sentiment of media planners and buyers is to be believed, then it the benefits of that advertising expansion are most likely to favor online and cable TV, the only two mediums that have a majority of planners and buyers citing increased ad spending plans.

The ad executives also signaled strong demand for radio and outdoor media, and significantly boosted their outlook for newspaper advertising.

Consumer magazines and broadcast network TV, conversely, continued to lag. In fact, network TV now ranks last among the major media in terms of underlying demand from media planners and buyers, with more saying their demand has decreased than increased.

That view is consistent with the rhetoric coming out of the major agency buying groups, which have begun trumpeting plans to cut back on the major broadcast networks in the 2004-05 upfront marketplace later this year. Agency execs, which were surprised - and somewhat embarrassed - by the unexpected strength of the 2003-04 upfront, now say they plan to shift more of their budgets into cable TV and other media.

December 2003 Ad Demand Index

How Ad Demand Has Changed Relative To The Same Point A Year Ago  

              Increased     Stayed The Same     Decreased   
Online
65%              26%               9%   
Cable            50%              36%              14%  
Radio            46%              43%              11%  
Outdoor          38%
43%              19%   
Magazines        27%              43%              30%   
Newspapers       24%              49%              27%  
Network TV       19%              57%
24%  
All Media        55%              39%               6%  

Source: Source: December 2003 MediaPost survey of media planners and buyers conducted online by InsightExpress. Base = 195 respondents.

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