• by Paul Gough , July 1, 2004

Despite a recent measurement company's prediction that the recovery will falter toward the end of the year, an investment bank that tracks advertising and media says that there's moderate momentum in the marketplace that should continue into next year.

Although 2004 is something of a perfect storm when it comes to ad-supported media--with a presidential election and the Olympics to boost spending and tighten inventory--there has been concern in some quarters that advertising isn't going to fare as well toward the end of the year, and even into 2005, when there won't be much in the way of election spending.

The contra-indicators began almost as soon as the signs of an advertising recovery became apparent. While television and the Internet have been stronger, radio and newspapers in particular have been all over the place. And even though the U.S. economy has been getting stronger, WPP Chief Executive Sir Martin Sorrell said that non-advertising factors might cause economic alarms--and soon.

"We're out of the bath, but we're a little bit concerned that we might take a shower in 2005," Sorrell told financial analysts in a conference call last February.

Last week during the annual AdWatch conference in New York, TNS Media Intelligence/CMR predicted that ad spending would be strong, with a 9.3 percent increase this year compared to 2003. The third quarter will see the biggest increase, with 10.9 percent more advertising thanks to a record-breaking election cycle and the boost from the Athens Olympics.

In a report released this week, Bear Stearns analyst Alexia Quadrani recounted a conference call between investors and an unidentified Madison Avenue media planner who said that the advertising marketplace seems to be gathering steam. According to the planner, ad spending is up between 4 percent and 6 percent, with a growth tracked to the economy. Strong categories include entertainment, telecom, retail, and foreign auto, which has been spending most on advertising recently to compete with the domestic automakers. Domestic auto--along with pharmaceutical and packaged goods--are flat, according to Bear Stearns.

Cable TV, the Internet, and outdoor are the leading categories, while print, local radio and second-tier TV networks aren't doing as well.

"Each of these suffers from less mass-media presence in an increasingly fragmented market," the report said.

Radio and print came under fire earlier this week at a conference sponsored by PricewaterhouseCoopers, which unveiled its five-year outlook for media spending. A panel of industry analysts agreed that Internet-based advertising was poised to do extremely well--and that other ad-supported media, like newspapers and radio, may not do that great going forward.

The planner said that media buying is being impacted by concerns over return on investment.

"Media buyers are becoming more integrated, and advertisers are now looking more intently at ROI, using new modeling tools as well as minute-by-minute ratings on TV to see if consumers are watching commercials," the report said. "This could lead to dollars shifting away from TV longer-term."

The planner was positive on overall ad spending in the second half and 2005, with growing commitments to spending.