Analysts Differ On Ad Outlook For Next Year

By: Lisa Singhania, AP Business Writer

(AP) Advertising spending should pick up in 2003 after a mostly flat 2002, two prominent advertising forecasters said Monday. But they differed on the extent of that recovery, amid unanswered questions about the pace and strength of the economic rebound and fears of a war in the Middle East.

Robert Coen, director of forecasting for Universal McCann, told the annual UBS Warburg Media Week conference that he expects to see a 5.0% increase in U.S. advertising spending in 2003 to $249.3 billion from 2002. He estimated 2002’s total will come in at $237.4 billion, up 2.6% from 2001.

But John Perriss, chief executive of the Zenith Optimedia Group, was more cautious, telling the same group that he projects a 1.9% increase in 2003 to $146.1 billion from the previous year. He put 2002 U.S. ad spending at $143.5 billion, a 1.3% increase from 2001.

Both analysts agreed that the Winter Olympics and political advertising for U.S. midterm elections helped stabilize the domestic advertising market this year. But their assessment of the risks in 2003 varied.

Coen, citing his belief that an economic recovery has taking hold, predicted that advertising spending would increase as advertisers became confident and bought more TV, radio, and other categories of ads. He said he is already seeing some encouraging signs.

“We see all these categories turning around, a better economic climate and a lot of things that make us more optimistic about 2003 than 2002,” he said.

By contrast, Perriss worried that consumer spending would falter next year, as consumers, discouraged by the weak stock market, pulled back on their spending. That would cause advertisers to pull back. Although consumers have so far continued to spend, Perriss isn’t convinced the trend will continue. The home refinancing boom fueled by lower interest rates, which put cash in a lot of consumers’ pockets, will likely eventually peter out.

“We question how long consumer demand can be supported on such weak equity markets,” he said.

He also expressed concern that another Gulf War could affect spending.

The men’s differing views also affected their global outlooks. Coen predicted global ad spending would rise by 4.9% in 2003 to $469.8 billion; while Perriss forecast a 2.9% gain to $320.7 billion.

Still, there were some similarities in the outlooks, chiefly in the view that broadcast advertising such as TV has the biggest potential for U.S. growth in 2003.

There was also optimism that 2004 would be a better year, because of the U.S. presidential election that year and the 2004 Olympic games in Athens. Both should prove a boon to advertising, boosting revenues that will hopefully already be benefiting from an economic recovery.

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