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AD SPENDING GROWTH SLOWS TO LOWEST LEVEL IN 10 YEARS

Published on .

(June 14, 2001) -- Ad spending growth will slow down to its lowest level since the recession of 1991, according to McCann-Erickson WorldGroup's financial forecaster.

In his annual mid-year forecast, Universal McCann Senior VP Robert J. Coen cut his 2001 outlook to 2.5%, led by a significant slowdown in major consumer media. National spending will grow 2.1% to $151.26 billion, and local advertising will grow 3.1% to $98.54 billion, which will result in a still-healthy $249.8 billion in spending.

"We're not looking at any great shakes -- national or local -- in 2001," said Mr. Coen.

TV spending will drop 0.4% from 2000, radio will grow only 2%, and both national magazines and newspapers will only rack up 1% growth. A 5% increase in local media, 4.5% increase in direct mail and 10% increase in Internet advertising won't be enough to counter the loss of $6 billion to $8 billion in dot-com advertising on traditional media. (See AdAge.com's Data Center for Mr. Coen's ad spending totals for 2000.)

Last December, Mr. Coen had forecast 5.8% growth in U.S. advertising in 2001, a sharp drop from previous years, but still nearly double the growth in the gross domestic product. But with the economy diving faster than expected, ad spending won't outpace the GDP in 2001 or 2002, when Mr. Coen is forecasting a 5% growth rate to $262 billion, thanks to mid-term election advertising and spending during the Winter Olympics.

"We have soemthing to celebrate today. We only have 200 days left in 2001," said Sean F. Orr, chief financial officer of Interpublic Group of Cos. -- Mercedes Cardona

Copyright June 2001, Crain Communications Inc.

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