$43.6B U.S. agency revenue
The most conservative forecast was made last month by TNS Media Intelligence, which projected that U.S. ad spending will increase by just 1.7% this year to $152.3 billion. The forecast was revised downward from a January forecast of 2.6% growth this year.
"Coming out of the fourth quarter and into the beginning of the year, the slower rate of economic activity, including the slowdown in consumer spending and slowing corporate spending growth, contributed to a more conservative, cautious mind-set among advertisers," said Jon Swallen, senior VP-director of research at TNS. "This resulted in a sharply reduced rate of ad spend in the first quarter."
During the first quarter, U.S. ad spending decreased by 0.3% to $34.93 billion from the first quarter of last year, according to TNS.
`Extremely soft' first quarter
Even adjusting for increased ad activity last year from the Winter Olympics, the first quarter was "extremely soft," Swallen said.
"What we're seeing now is that the rate of growth in the general economy is not going to pick up sharply," he said. "We are going to continue to see ongoing caution on the part of marketers, and we will continue to see the migration of advertising dollars from traditional offline media into the Internet and other new digital media opportunities."
TNS projects that Internet display ad spending will increase by 16.0% this year.
Cable network TV ad spending will grow by 5.9% this year, outdoor advertising will increase by 4.6%, network TV ad spending will grow by 1.6%, and advertising in b-to-b magazines will decrease by 1.5%, according to TNS.
Year-to-date through April, ad spending in b-to-b publications was down by 0.81% from the same period last year, according to the Business Information Network report from American Business Media, based on data from IMS/The Auditor.
Also last month, media agency Universal McCann revised its U.S. ad spending forecast down to 3.1% growth this year to $290.3 billion, from a December forecast of 4.8% growth.
"The outlook for advertising this year is not very good," said Robert Coen, senior VP-director of forecasting at Universal McCann, during a presentation last month at the agency's Advertising and Media Outlook Mid-Year Update.
Coen said large companies have been cutting expenses wherever they can as they focus on productivity and profit growth. Online advertising and search marketing have "violently" impacted established media as the appeal of marketing tactics closely tied to transactions grows, he said.
In terms of national advertising by medium, Internet and direct mail were the biggest gainers in the first quarter of the year, growing 16.7% and 4.5%, respectively, over the same period last year, according to Universal McCann.
Spending on TV, spot TV, syndicated TV, spot radio and newspapers decreased in the first quarter.
Global spending growing
International ad spending is growing faster than U.S. ad spending this year, with global ad spending projected to increase 5.2% to $338.9 billion, according to Universal McCann.
In 2008, U.S. ad spending is expected to increase by 5.0% to $305.0 billion, while global ad spending is projected to increase 5.8% to $360.0 billion, according to the forecast.
Also, ZenithOptimedia this month downgraded its forecast for North America ad spending this year to $188.87 billion, up 3.5% over last year, from a December projection of 4.2% growth.
Next year, ad spending in North America will total $196.66 billion, up 4.1% over this year, boosted by the U.S. presidential election and the Summer Olympics.
ZenithOptimedia also projects that global ad spending will reach $489.32 billion next year, up 6.4% from $459.77 billion this year, boosted by the Olympics.
Also according to the forecast, Internet ad spending will grow six times faster than traditional media between 2006 and 2009, increasing its share of the ad market from 6.1% to 9.4% during this time period.
In another forecast revision, media agency Carat downgraded its U.S. ad spending projection to 5.1% growth this year, from a December forecast of 5.2%.
Carat projected that U.S. ad spending would increase 5.6% next year, buoyed by Olympic ad spending and the U.S. presidential election.
Globally, ad spending will grow 5.8% this year and 6.4% next year, Carat projects.
The biggest growth will come from online ad spending, while newspapers will be the slowest-growing segment, according to the report.
Senior Reporter Carol Krol contributed to this report.