Ad Spending Outlook Not Exciting

There’s little reason to celebrate over the latest forecast on ad spending by Robert Coen, senior vice president and dad_spending_outlook_not_exciting.htmirector of forecasting for Universal McCann. His finding was that the U.S. outlay, fueled in part by the election and the Summer Olympics, will grow by 3.7% next year to $294 billion.

That beats the 0.7% growth expected in 2007. But it’s lower than the 4.6% worldwide total projected for 2008. And it reflects a continuing downtown in “the relative importance of advertising,” Coen maintained.

Advertising has fallen as a share of gross domestic product from 2.52% in 2000 to 2.05% this year; nationwide ad spending should total $283.8 billion in 2007, he said.

The 2007 growth rate, reduced by several percentage points from an earlier projection, has been caused largely by economic worries. As Coen wrote in his analysis, “U.S. advertising growth has been performing poorly, as marketers trusted their fears more than their hopes.”

In addition, “the Internet and growing digital alternatives siphoned off funds from many traditional advertising practices,” Coen noted. But online growth also seems to be cooling. He projected that internet spending will increase by 16.5% next year to $12.7 billion; this year it grew by 20% to $10.9 billion.

Direct mail spending will hit $63 million next year, a 4.5% increase over 2007. This year, mail increased by 4% to $60 billion, Coen reported.

If Coen’s forecast holds up, the big traditional media winner next year will be spot TV, which is expected to grow by 10% to $17.8 billion. But he warned that the anticipated bump in spending next year will not continue in 2009.

Also weighing the totals down is the increased focus on return on investment. “The desire for growing corporate profits has intensified and marketers have fiercely opposed above-average media price increases,” Coen wrote.

Meanwhile, international growth is being fueled by spending in many emerging markets. Coen predicted it will rise by 5.3% next year to $359.5 billion. He presented his findings at the UBS Global Media conference in New York on Monday, December 3.