• by Jack Loechner , Staff Writer @mp_research, January 28, 2003

An accurate forecast of ad spending in 2003 is about as likely as hitting a piñada in the dark. But Veronis Suhler and Universal McCann, with remarkable insight into each of the industry sectors, make an effective long-range projection.

Based on past history, the Universal McCann Insider’s Report says that advertising growth is expected to fall more closely in line with nominal gross domestic growth by 2003, but will not significantly outpace economic growth until 2004. The report projects U.S. ad expenditures for 2003 at $249.2 billion, a 5.5% growth over projected 2002 year-end, including both local and national advertising.

Veronis Suhler Stevenson, in its 16th Annual Communications Industry Forecast (CIF), says that advertising spending is expected to grow about 4% through 2006, a considerable drop from its annual 6% growth from 1996 through 2001. One of the most remarkable findings in the new CIF is that there is no break in the ever-expanding American appetite for media. The average American spent 2,094 hours a month with advertising-supported media in 2001, projected to increase at a 1.2% compounded annual rate through 2006.

Broadcast television advertising expenditures dropped 8.6% for the year 2001. National spot advertising fell 20%, with automotive cutbacks and the absence of political advertising last year contributing to the steep decline. CIF projects total broadcast TV advertising spending will grow at a compound annual rate of 3.8% from 2001 to 2006.

For this year, CIF projects an ad spending increase of 13.8% on cable and satellite TV. Growth through 2006 is projected at 7.1% compounded. After nine consecutive years of accelerating growth, radio advertising expenditures declined 6.2% in 2001. Buoyed, however, by aggressive marketing on the part of the dominant radio groups, local ad spending will rebound 3% this year, while national radio will show 4% growth. Through 2006, spending is expected to grow 6.2% on a compound annual basis.

Because Internet ads have receded into the marketplace clutter that surrounds Americans, and because online advertisers haven’t yet found effective ways to re-engage Web surfers, Internet ad spending will rebound by only a modest 4.1% in 2002, and grow at a compound annual rate of 5% for the entire forecast period.

The top 12 categories of consumer magazine advertisers cut spending an aggregate 9.8% for 2001, and will post an overall decline of 3% for 2002. Overall consumer magazine spending is expected to expand at a compound annual rate of 3.1% through 2006.