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International: 2004 ad spending to increase 9.3% over last year

19-June-2004
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International: 2004 ad spending to increase 9.3% over last year

Advertising spending will hit $140.3 billion in the US during 2004, but it will be a changed industry that rakes in those gains, according to a forecast unveiled at the AdWatch: Outlook 2004.

Speaking at the conference at the Sheraton New York Hotel and Towers, Steven Fredericks, president-CEO of TNS Media Intelligence/CMR, said 2004 "is shaping up to be a very good year for ad spending." CMR is a co-sponsor of the third annual conference with Advertising Age.

Olympics and politics

Mr. Fredericks opened the conference with a forecast that U.S. ad spending will grow 9.3% for the year over 2003. Totals will be helped by a record $1.5 billion in political ad spending and $850 million in ad spending related to the Summer Olympic Games in Athens.

First-half spending will grow by 9.4%, while second-half totals will rise 9.2%, according to the CMR forecast. Mr. Fredericks said the second-half slide is due to a slowdown in Gross Domestic Product growth expected by economists during the fourth quarter, but it will be partly offset by the Olympic and election spending.

All media will see growth, except for business-to-business magazines, which will be down 0.1% for the year. The Internet will grow fastest, by 15.8%, followed by spot TV, up 14.3% and radio growth of 11.5%. Among TV sectors, cable will grow 9.9% while network TV and syndication will both grow 9.8% and Spanish-language TV will be up 7%. Newspapers and magazines will both grow 6.4% each and outdoor will grow by 8.4%.

Some are skeptical

Some observers were skeptical about the rosy forecast, noting the radio totals are out of synch with the most other forecasts, which show radio lagging. CIBC World Markets analyst Jason Helfstein noted most forecasts put radio growth at 6%. Mr. Helfstein also noted the Olympic advertising is not usually incremental spending, but portions of existing budgets that are redirected to that purpose.

AdWatch speakers said that while spending is coming back strong, it is returning to a changed industry. Layoffs and restructuring during the recession have refocused agencies and media companies to deal with increased audience fragmentation, the rise of digital media and a changed consumer.

"One of the things recession does is tend to cleanse the market ... the strong will have grown stronger," said Dominic Proctor, CEO of WPP Group's media arm, MindShare.

Procurement pressure

Many agencies are hiring again, but they are hiring staffers with different skill sets, more versed in the new environment of increased performance scrutiny and more procurement pressure on margins, said Tom Bernardin, president of Publicis Groupe's Leo Burnett Worldwide.

And the executives admitted the procurement pressure is not going away anytime soon.

"We all got hit in the face by a 'fools rush in' kind of reality," following the bust of the tech bubble, said Mark Lazarus, president of Time Warner's Turner Entertainment Group. Even as the good economic times return, marketers will continue to scrutinize their advertising investments very closely, he said.

Source: AdAge.com Online Edition

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