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AD FORECASTS BRING GOOD NEWS PERRISS, COEN BOTH SEE BRIGHT '95 WITH AD SPENDING UP 4.7% TO 6.8%

By Published on .

NEW YORK-Pockets of optimism about the economic future of the ad industry are beginning to form a true consensus.

Two leading ad industry forecasters predicted a continued surge in U.S. ad spending and-in one case-a return to a time when ad industry growth outpaces that of the general economy.

The predictions by McCann-Erickson Worldwide Senior VP-Director of Forecasting Bob Coen and Saatchi & Saatchi Co.'s Zenith Media Worldwide Chairman John Perriss follow those of other top prognosticators, who believe the current upturn in ad spending is more than a blip.

"I'm now convinced that we are back on track and that advertising will grow faster than the [gross domestic product] for the next decade," said Mr. Coen, speaking at the annual PaineWebber Media Conference.

He forecasts a 6.8% increase in U.S. ad spending in 1995, to $159 billion. The U.S. gross domestic product is expected to rise 5.7% next year.

The bullish outlook comes on the heels of a higher-than-projected growth rate for 1994; Mr. Coen now estimates U.S. ad spending will rise 7.9% to $149 billion.

A year ago, he predicted a 6.3% increase in U.S. ad spending, but he said continued improvement in the national economy, greater demand from advertisers and a tightening supply of advertising inventory contributed to the correction.

"I see the media capacity starting to fill up," Mr. Coen said, suggesting that spillover in ad demand could drive money to new electronic media.

Zenith's Mr. Perriss was less sanguine about U.S. ad spending growth in 1995, but nonetheless predicted a healthy 4.7% growth rate in 1995 and a 5.4% rise in 1996, when the presidential election and Atlanta Olympics spending will fuel incremental growth.

Indeed, McCann's Mr. Coen said higher-than-expected broadcast spending, particularly during the Winter Olympics on CBS, was another factor in the revision of his 1994 estimate.

Unlike past recent Olympics when advertisers funded the event buy from existing ad budgets, Mr. Coen said, "most of that money was new" in 1994.

Mr. Coen predicted worldwide ad spending will rise at a faster rate than U.S. spending in 1995, up 7.4% to $345.7 billion, due to an 8% growth rate in the overseas ad economy to $186.7 billion.

Zenith's Mr. Perriss was more bullish on the global front, estimating that worldwide ad spending will be up 8.1% in 1995.

The rosy opinions concur with those of other ad forecasters, including investment banker Veronis, Suhler & Associates and media consultant Myers Communications, Parsippany, N.J. Both predict a 6.4% U.S. ad spending rise in '95, though they allocate different percentage changes to various media.

"If you look at the individual media, we've all got growth in different places," said Myers President Jack Myers. "But the bottom line is that everybody is pretty consistent that 1995 is going to be a strong year."

Mr. Myers said his estimates point to stronger growth in consumer magazine and network TV spending than some forecasts, partly because of the elements he sees driving the turnaround.

"I think this is a fundamental shift and re-emphasis to brand equity," he said. "The realities of the retail business .*.*. have led to something of an underlying shift in companies toward building brand awareness, which is an advertising function."

But Mr. Myers sounded an ominous note, predicting a "cyclical downturn" by the fourth quarter of 1996.

"It won't be dramatic and certainly not cataclysmic, but I think the kinds of growth we will see in '94, '95 and '96 will stabilize in '97 and the end of the decade."

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