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International: Ad forecasters predict U.S.-led rebound in 2003

International: Ad forecasters predict U.S.-led rebound in 2003

Author | exchange4media News Service | Wednesday, Dec 11,2002 8:18 AM

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International: Ad forecasters predict U.S.-led rebound in 2003

The hard-hit advertising industry is expected to make a comeback next year, driven by a rebound in the key U.S. market, but there will be no big bang global recovery, two leading forecasters said.

After one of the worst downturns on record, Zenith Optimedia said the advertising industry had hit a bottom, and global spending on major media was expected to climb 2.9 percent next year, with the United States set to rise 1.9 percent.

Universal McCann's forecasting guru Robert Coen was even more optimistic, saying he expected U.S. advertising spending to grow five percent next year to $249 billion, bumping worldwide advertising spending 4.9 percent higher to $470 billion.

Nevertheless, ZenithOptimedia said the industry would have to wait until 2004 for a more sustained recovery, when it expects spending to rise 4.4 percent as Europe kicks back in with a 4.6-percent rebound after initially lagging the U.S.

The advertising industry has shown tentative signs of life this year after what many executives describe as the worst slump since the Great Depression. U.S. broadcasters have been the most upbeat, reporting a significant resurgence in advertising.

But analysts caution that many risks remain, including a possible war with Iraq, weak European markets, and the fact that a recovery has so far been restricted to only a handful of sectors such as autos and political advertising.

While the U.S. market, which accounts for nearly half of global advertising spending, will initially lead the recovery, the U.S. presidential elections and the Athens Olympics in 2004 are expected to cement the rebound in 2004.

According to ZenithOptimedia the U.S. market would rise 1.4 percent this year, compared with a previous forecast for a 0.1-percent fall, due partly to stronger-than-expected spending for congressional elections.

Coen -- commonly one of the more optimistic forecasters -- said he expected U.S. spending to rise 2.6 percent this year, with national advertising seen 2.7 percent higher and local advertising up 2.6 percent.

The strong U.S. market prompted ZenithOptimedia to revise its global forecast to a 0.2-percent rise this year from a previous 0.5-percent predicted fall. Zenith's figures refer only to major media: TV, print, radio, cinema, outdoor and Internet.

For next year, ZenithOptimedia was less optimistic than Coen, citing concerns such as durability of consumer spending. Meanwhile, Coen said by 2004 he expected advertising to surpass levels seen during the dot-com boom in 2000, citing better economic conditions and consumer confidence.

Also speaking at the conference, U.K. advertising group Aegis AGS was more cautious than ZenithOptimedia and Coen, saying it expected global spending to rise 2.3 percent next year.

Shares in advertising giant Interpublic Group IPG of Cos. Inc., which owns Universal McCann, were 5.6 percent down at $13.64 at 1830 GMT. Rivals WPP Group WPP and Omnicom OMC were two percent and 3.2 percent down respectively.

Spending in Europe is expected to fall 1.1 percent this year before swinging back to 2.5 percent growth next year, said ZenithOptimedia, which is jointly owned by France's Publicis PUBP and Britain's Cordiant Communications CRI .

Nevertheless, ZenithOptimedia expects Europe to outstrip the U.S. by 2004, rising 4.6 percent versus 3.6 percent in the U.S.

ZenithOptimedia said it did not expect a further worsening in any European markets, even the weakest, Germany, despite scaling back its forecasts for Europe this year.

Britain is the strongest of the five top European markets this year, with spending expected to fall 0.9 percent. But ZenithOptimedia's forecast for Britain in 2004 is the most bearish of the five, with growth seen at just 3.1 percent.

Tags: e4m

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