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U.S. Ad Spending Looks Better, But Still Not Great, Study Says


Advertising spending in the U.S., boosted by election-related campaigning, is now expected to fall this year by a smaller amount than thought in July, according to a closely watched forecast by a leading ad-buying agency.

Media services and forecasting firm Zenith Optimedia Group now expects U.S. ad spending on major media to fall by only 0.1% in current prices, compared with the 1.2% fall expected in July. The report noted that spending will be boosted by election-related advertising. The survey, however, found that U.S. ad demand is "patchy," and the group reduced its forecast for U.S. ad spending in 2003 to 1.5% growth from growth of 1.9% predicted in July.

The Zenith survey, considered an important predictor of ad-spending intentions, revised its forecast for global ad spending on major media in 2002 to a decline of 0.3% from a 0.5% decline predicted in July.

Separately, Merrill Lynch & Co. said global ad spending in 2002 will decline 1.2%, compared with an earlier projection of a 1.3% decline. For 2003, Merrill forecasts that U.S. ad spending will grow 4%, down from an earlier forecast of 4.2% growth. Merrill also revised downward its expectations of global advertising in 2003, to 3% growth from an earlier estimate of 4%. In her report, analyst Lauren Rich Fine noted that the projections don't "incorporate a war scenario."

Advertising demand in Europe continues to lag; the outlook in some major European markets has worsened as corporate profits remain shaky, according to the report due for release Monday. Zenith Optimedia Group is jointly owned by France's Publicis Groupe SA and Britain's Cordiant Communications Group PLC.

Spending in some U.S. markets for local TV, local radio and outdoor ads is strong from political candidates, auto, retail, telecommunications and movie-studio categories. Demand for newspaper advertising this autumn is also stronger than expected, so Zenith is raising its U.S. newspaper ad-spending estimate to a decline of 2.5% from a 4% fall expected earlier.

"It would be great news if this was a prologue," says Adam Smith, head of knowledge management at Zenith Optimedia. "However, if it's a prologue it's a very long one. Substantial recovery is still off the edge of our horizon."

 

Erin White, The Wall Street Journal. September 9, 2002

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