U.S. Ad-Spending Growth Slows Way Down

[Ek Kanya]

Pessimistic Outlook Offered by Universal McCann and PricewaterhouseCoopers


read more at adage.com

Three new ad-spending forecasts out this week -- and even a report intended to gauge how consumers view various
vidheader


In the first video-taped presentation of his ad spend projections report, McCann Senior VP Robert Coen said 'things are pretty bad' for the ad industry. | ALSO: Comment on this article in the 'Your Opinion' box below.



Universal McCann's senior VP-director of forecasting, veteran Robert Coen, has dialed down his prediction for U.S. advertising growth this year from an already low 4.8% to 3.1% growth over last year.

The actual dollar amount of advertising growth will dip even further, to $290.3 billion from $298.8 billion, because the original forecast was based on a 2006 projected gain that did not materialize. Ad spending grew only 3.9% last year instead of 5.2%, despite bumps from elections and the Olympics.

"I can't deny it anymore," Mr. Coen said. "Things are pretty bad."

Spending by category
A more granular view offers relief to some. Drug-company spending in magazines was up 21% in the first quarter compared to the same period last year; food advertising in magazines was also up 11%. The auto industry, dealing with its own set of woes, however, cut spending 11% on national TV networks and 7% on spot TV. Automakers' spending in magazines was up only 2%.

The categories with bigger increases were computers, up 32% across national TV, spot TV and magazines; banks and savings-and-loan companies, up 53%; fitness and diet programs, with a 37% increase overall and an impressive 318% leap on national TV alone; and colleges and universities, up 27% including a 627% increase in national TV spending.

The media in which ad revenue increased in the first quarter were the internet, up 16.7%; direct mail, up 4.5 %; magazines, up 4.1%; the yellow pages, up 2%; and cable TV networks, up 1.4%.

Mr. Coen said the third quarter of 2006 saw a boycott-like drop in spending on the networks, perhaps in protest of rates rising much faster than inflation. Meanwhile, he said, cable had an uptick on better programs targeted to better audiences.