Ad Spending to Rise 9.3% in '04

By: Noreen O'Leary (Adweek) On the heels of "robust ad growth" in the first quarter, in which spending rose 9.6% to $31.5 billion from the year-earlier period, TNS Media Intelligence/CMR is forecasting a full-year jump in the U.S. of 9.3% to $140.3 billion, according to a report released last week.

The media and marketing research group estimates the first half will register growth of 9.4%, with the second half up 9.2%. Quadrennial boosts from the Olympics and the elections are expected to contribute significantly in the third quarter, which is likely to be the strongest period of the year.

TNS/CMR forecasts political spending will total $1.5 billion in 2004, with $1.3 billion being spent on the candidates and the rest on issue-related ads. Olympic ad spending is expected to ring up an incremental $850 million, up $100 million from the amount spent during the 2000 Sydney Games.

Steven Fredericks, president and CEO of New York-based TNS/CMR, said other factors fueling growth this year include big increases in leading advertising categories and on new brands. "We've seen a 16% increase in advertising from new brands," he said. "In the first quarter, that spending of $945 million is the highest we've seen in four years."

The most active sectors for new brands in the first quarter were motion pictures, domestic autos, audio and video equipment, pharmaceuticals and health aids. Among the "leading advertising categories," spending from pharmaceuticals rose 29%; banking and financial services, 23%; transportation and tourism, 17%; media and marketing services, 17%; nondomestic automotive, 10%; and telecommunications companies, 10%, Fredericks said.

Ad spending on the Internet is expected to surge 15.8% in 2004, showing the highest increase of any media sector. TNS/CMR said all of the measured media it tracks, with the exception of B2B magazines, is expected to grow this year. A similar pattern emerged in the first quarter, with double-digit, year-over-year gains posted by the Internet, up 28.1% to $1.9 billion; national syndication, up 16.7% to $947.8 million; cable TV, up 16.3% to nearly $3 billion; national newspapers, up 14.6% to $774.6 million; and network TV, up 11.5% to $5.6 billion. National spot radio showed the only decline, dropping 2.2%.

In January, TNS/CMR predicted 2004 ad spending would increase 7.8% to $138.4 billion.

"Clearly, the first quarter of 2003 was not typical, with concerns over the Iraq war and the economy," Fredericks said. "But the GDP came in 4.2% in the first quarter, higher than [analysts such as] UBS expected. So while the economy is a variable, and 2003 was a weaker quarter, it was nonetheless a strong quarter and one of the main reasons we increased our 2004 estimate."