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Forecasters see modest ad spending growth in ’05 and ’06

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New York—Two major advertising industry forecasters Monday unveiled spending projections for 2006, as well as adjusted estimates for this year, in presentations at the UBS 33rd Annual Global Media Conference.

Robert J. Coen, Universal McCann's senior VP-director of forecasting, said he expects U.S. advertising to increase 5.8% to $292.0 billion in 2006. Coen estimates a 4.6% increase in U.S. advertising to $276.0 billion for this year. Worldwide, Coen projected a 6.2% increase to $604.0 billion in 2006, while worldwide ad expenditures are expected to total $569.8 billion for 2005, a gain of 4.8% over 2004.

ZenithOptimedia's Steve King, global CEO, predicted global advertising in 2006 will increase 5.9% to $427.3 billion. King forecast ad spending will total $403.7 billion in 2005, a 4.8% increase compared with 2004.

King characterized overall growth for 2005 and 2006 as "stable with healthy hot spots." Coen had a much less sanguine view, characterizing ad growth as "meager" and spending as "weak."

"It was a pretty poor year," Coen said. "There was a lot of cautiousness among major marketers. Advertising stalled despite a pretty good economy."

Both forecasters pointed to caution on the part of advertisers and economic uncertainty as contributing to the lack of robust growth for 2005 and 2006.

In terms of growth by category, Coen indicated direct mail was the clear winner with the strongest growth pattern.

"On an annualized basis, nearly 10 billion more pieces of mail advertisements have been sent in 2005 compared to the year 2000," he reported. That trend was influenced by both the restrictions on telemarketing as a result of the do-not-call legislation, as well as a continued focus on measurable media.

—Carol Krol

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