Ad Spending To Climb This Year
Tuesday, June 27th 2000, 12:00 am
By: News On 6
NEW YORK (AP) â€” Advertising spending is expected to climb 9.4 percent this year in the United States, the biggest increase in 16 years, one of the industry's top forecasters said Tuesday in revising his growth estimates upward.
Veteran ad spending tracker Robert Coen said the economy's continued resilience and strong advertiser demand that is pushing up prices for network TV commercials prompted him to boost his December forecast of 8.3 percent growth for this year.
Political advertising, spending by Internet companies to make names for themselves and promotions related to the Millennium and the Summer Olympics in Australia were also cited for the surge in ad spending.
``It's going to be an exceptional year,'' said Coen, who has been monitoring ad spending for 50 years.
It would be the biggest increase in ad spending since a 15.8 percent increase in 1984, when Los Angeles hosted the Olympic Games during an election year and triggered a burst of extra commercial activity.
But he expects more moderate growth of 6.5 percent next year, when there won't be an election, millennium celebration or Olympics to spur sales.
Coen, who is head of forecasting for Universal McCann, the media services arm of ad agency McCann-Erickson Worldwide, expects U.S. ad spending will rise to $235.6 billion this year from $215.3 million in 1999.
That includes an 11.1 percent increase in spending by national advertisers and a 7.0 percent increase by local advertisers. In December, Coen was looking for increases of 9.1 percent by national advertisers and 7.1 percent by local advertisers.
``We were too cautious,'' Coen said, adding the economic outlook is brighter than it was in December and national demand for ad time and space is stronger.
The new forecast includes a 12 percent rise to $15.6 billion in ad spending on the four biggest broadcast networks â€” ABC, CBS, NBC and Fox â€” and a 20 percent jump to $9 billion on cable TV networks.
Last month, advertisers reportedly made commitments to spend $8 billion for commercials in prime time during the TV season starting this fall on six broadcast TV networks including the Big Four and the smaller UPN and WB networks. Those commitments were up about 14 percent from the advance sales a year ago.
``That was a reflection of people's intent to spend into 2001 for the new TV season,'' said Alec Gerster, chairman of MediaCom, the media buying arm of Grey Global. ``It was a pretty robust increase.''
Coen's report said national ad spending is expected to rise 7.5 percent to $12.3 billion in magazines, 12 percent to $7.1 billion in newspapers and 15 percent to $4.6 billion on radio.
National advertisers are also expected to boost direct mail advertising by 8 percent to $44.7 billion this year and phone book ad spending by 7 percent to $2.1 billion. National advertising on the Internet should climb 75 percent to $3.4 billion, Coen said.
He expects local advertisers will boost spending by 5 percent to $42.3 billion in newspapers, 8.5 percent to $13.7 billion on local TV and 12 percent to $14.8 billion on radio.
Among key ad categories on TV and magazines, he said auto ad spending was up 7 percent in the first quarter and spending by makers of drugs and other remedies rose 20 percent. Food advertising was off 5 percent, which Coen said may reflect efforts to keep costs low because of competitive pressures against raising prices.
Advertising spending overseas should rise 7.2 percent this year to $247 billion, the report said. That was slightly above Coen's December forecast of 7.0 percent growth.
He expects ad spending overseas will accelerate to 7.8 percent next year.