'96 EXPECTED TO DELIVER ENERGETIC AD GROWTH;AFTER ROSY '95, BOOM FORESEEN FROM OLYMPICS, FALL ELECTIONS

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Advertising growth should continue to expand in 1996 despite a touch of moderation in the opening, in the severe winter months.

The Summer Olympics, political contests and further movement away from promotional marketing tactics should restore strong ad momentum in the second half of the year.

Undoubtedly '96 will be another banner year, the only question now is whether the momentum will continue into 1997.

LOOKING BACK AT '95

In 1995, most media managed to post healthy growth rates (see chart at right) despite some real obstacles. First of all, prior-year spending levels were exceptionally high because the Olympics and hotly contested congressional races boosted 1994 ad volume levels, making significant gains difficult to accomplish in '95.

In addition, there was the handicap of a slackening in the economy. The growth in nominal gross domestic product slowed from 5.8% in 1994 to 4.5% in 1995, but ad spending far outpaced the economy, with growth now finalized at 7.3% for 1995.

Advertising by national marketers increased by nearly $7 billion-to $94.3 billion-in 1995, a gain of 8% from 1994.

Major network and spot TV budgets showed relatively modest gains because of the tougher comparisons with 1994 when the Winter Olympics and the elections contributed extra spending spikes to these media sectors.

Most other national media had very good ad gains in 1995, although the economic moderation did slow the ad expansion somewhat in the final quarter.

Local marketers' ad-budget growth rates also outpaced the economy last year, but sluggish consumer spending trends continued to hold back ad spending by many local retailers as store openings failed to offset closings.

Nevertheless, total local advertising did again moderately outpace the economy by rising 6.3% to $66.6 billion in 1995.

When '95 began, it didn't seem likely that ad growth could sharply outpace the economy again, especially as the expansion was showing signs of slowing. But now that all the final available facts have been evaluated, it's apparent that ad growth did outpace the economy again and advertising's share of marketing budgets continued to expand.

The total for all U.S. advertising rose by more than $10 billion to $160.9 billion in 1995, up 7.3%.

OUTLOOK FOR '96

As 1995 advertising expanded at a better-than-expected pace, the anticipation of a boom for '96 grew even stronger.

However, the slowdown in the economy eventually had an impact on many media in the closing months of last year, and 1996 started with one of the most severe winters in years.

Consumers, with increasing concerns about job security as announcements of corporate downsizing continued, stayed home from the shopping malls and showrooms in droves during January and February. The boom expectations that prevailed late last year also began to moderate with the arrival of final fourth-quarter ad spending reports.

Nevertheless, first-quarter 1996 advertising has been up though not as strong as previously expected. As spring arrived, so did better economic news, accompanied by a gradual improvement in consumer confidence.

The growth of advertising in the first half of 1996 should only modestly exceed GNP growth, but during the second half of the year a boom in ad spending is likely to materialize.

OLYMPIC AD DEMAND

The strong price hikes for TV's upfront selling season, as well as large premiums in the so-called scatter prices for time sold later, are expected to hold during the summer and early fall months as a result of extraordinary ad demand brought on by the Summer Olympics and many intense contests for the U.S. Senate and House of Representatives, as well as the run for the presidency.

Despite the moderate start, full-year growth in U.S. advertising should well exceed the growth of the economy.

Mr. Coen is senior VP-director of forecasting, McCann-Erickson Worldwide, New York.

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