Just last week, Competitive Media Reporting (CMR) painted a bright picture of US ad spending. This week Zenith Optimedia presented a darker version.
Zenith revised its U.S. advertising spending
forecast for 2002 slightly upward but said it saw no sign of real recovery for the U.S. media industry. By the numbers, in April 2002, Zenith predicted that U.S. advertising spending would decline by
1.8%. Now Zenith believes U.S. ad spending will decline by 1.2% this year, acknowledging that the corporate profits picture remains dark. Global ad spending will decline by 0.5% this year, according
to Zenith’s forecast.
Zenith also reported that advertising spending in the United States declined 6.1% in 2001. The decline was 3.8% in a global basis. “The US economy shows intermittent strength
and talk of recession has all but ended. Consumer confidence remains high and inflation remains low,” the Zenith report states. “We project a 1.2% current-price decline in major media ad spend for
2002, a slight upgrade to our last projection. Compared to the 6.1% decline in 2001, it almost seems like growth.”
Where CMR predicted an increase for this year fueled mostly by a healthy upfront
commitment to network TV, Zenith says that’s no guarantee of growth. “While this is clearly a positive sign of a stronger media economy, it does not guarantee the networks a healthy increase in
revenues for 2003. A majority of the uptick represents dollars held back from last year’s budgets rather than organic increases in total spend, and advertisers can revoke these advance purchases
during the season,” the report states.
The report did not address increases in multiethnic marketing, which CMR says will also fuel growth this year. Zenith indicates that the short term economic
climate may be one in which consumer spending enjoys a robust rebound, while corporate advertising takes a longer time to catch up. “2001 was a good illustration of how advertising spend can diverge
from the indicator of consumer confidence, as it did in the early 1990s,” it says.
“Consumers carried on spending while corporations cut advertising. Restoring corporate profits will be a vital
component in the advertising recovery. A year or two from now we may even see the paradox of advertising growing while consumption is slowing, unless the global economy starts growing so quickly that
both consumption and investment can expand at the same time.”