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Many sectors to boost ad spending

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Despite the down economy, many industries will increase ad spending next year, according to the 32nd annual “Advertising Ratios & Budgets” report, released last month by research company Schonfeld & Associates. The report forecasts ad spending and provides estimates of ad/sales ratios for more than 4,900 individual companies across more than 300 industries. The data are gathered from publicly reported information and analyzed using a proprietary forecasting model. The biggest ad spending category next year will be the diversified food industry, which will spend $38.1 billion on advertising, up 11.8% over ad spending this year. Automobile manufacturers will spend $34.4 billion on advertising next year, up only 1.7% over this year. The telecommunications service industry, excluding wireless pro-viders, will be another big spender next year, with ad spending projected to reach $30.0 billion, up 10.6% over this year. Other top ad spenders next year include pharmaceutical companies, which will increase ad spending 7.8% to $25.4 billion; cable and other pay TV services, which will boost ad spending 5.6% to $17.9 billion; and life insurance companies, which will increase ad spending 26.0% to $12.6 billion. “Overall, 2009 promises to be a year of continued modestly increasing advertising spending,” said Carol Greenhut, president of Schonfeld & Associates, Libertyville, Ill. “Spending is being pulled back somewhat, but marketing dollars are still being used to protect market share so companies are well-positioned.” Greenhut added: “We are seeing growth in insurance advertising as the baby boomer generation hits maturity,” “Also, within various telecommunications industries, such as cell phones and PDA devices, there is huge competition. That industry seems to be somewhat recession-proof.” Ad spending by wireless communications service providers will reach $11.9 billion next year, up 8.5% over this year. Cell phone and PDA manufacturers are expected to spend $7.4 billion next year, an 11.2 % increase. The report also predicted 2009 will show continued demand for computer-related products. Semiconductor and related device manufacturers will spend $5.3 billion on advertising next year, up 9.5% over this year, and prepackaged software companies will spend $5.3 billion on ads, an increase of 10.9%. Other financial service industries will also increase their ad spending in 2009, Schonfeld projects. Real estate investment companies will spend $4.0 billion on ads next year, up 14.3% over this year; investment advisers will spend $3.7 billion, up 18.2%; and security brokers and dealers will spend $3.0 billion, up 16.0%. Among those industries forecast to decrease ad spending next year are trucking and courier services (down 49.1%); hardware, plumbing and heating equipment, wholesale (down 22.4%); lumber, plywood and millwork, wholesale (down 8.0%); and paper and paper products, wholesale (down 7.1%). In addition to projecting ad sales, the report also provides an estimate of advertising-to-sales ratios by industry. Food and cosmetics industries have the highest ad/sales ratios, with perfume and cosmetics companies spending an average of 19.2% of their net sales on advertising and diversified food companies having an average 13.3% ad/sales ratio. Other ad/sales ratios include pharmaceutical companies (4.2%); wireless communications providers (3.1%); telecommunications companies, excluding wireless (2.5%); prepackaged software (2.5%); semiconductors and related devices (2.0%); and life insurance (1.4%). M
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