Ad spending seen showing growth in '02

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[riverwoods, ill.] Advertising spending will grow a robust 6.7% in 2002, according to Schonfeld & Associates' 25th annual study, Advertising Ratios & Budgets.

That's about the same level of growth it-overoptimistically- projected a year ago for 2001. (Many analysts forecast ad spending decline in 2001 and little growth in 2002).

Advertisers' increased use of the Internet for both consumer and business-to-business marketing will take its toll on measured media spending, the forecast found. But, based on companies' budgets, ad spending will rise in nearly every one of the 300 industry sectors studies.

The new report covers more than 6,300 companies, including more than 350 major foreign firms; information is compiled from a variety of sources such as 10-K reports.

Last year's forecast for 2001 was overly optimistic, calling for increased spending fueled by the stock market boom and new product investment (AA, July 24, 2000). That forecast was compiled in mid-2000 and based on the companies' own forecasts, and "2001 did look much brighter in the middle of 2000," said Carol Greenhut, president of Schonfeld & Associates.

Additionally, many companies will maintain their sales-to-advertising ratio but spend less as sales wane.


Large food companies are expected to spend just over $21 billion in 2002, practically flat with 2001's $21.2 billion. The 118 restaurant chains in the study will average 1.8% ad growth and spend a total of $2.9 billion in 2002, the report found.

The telecommunications industry is expected to be the top-spending industry with $28 billion in spending, up 6.9%.

Many telecom players are projected to spend more as they change their business: Ad spending for wireless communications services will rise 13.2% to $5.4 billion; cable and satellite TV services, spurred by attempts to get a share of the Internet access business will spend $2.5 billion in 2002.

The pharmaceutical industry will increase spending 12.4% in 2002 to the $25.6 billion mark as companies invest to defend their over-the-counter versions of major drugs from generics that will move into their markets as several major patents expire in coming years, according to the study. Direct-to-consumer advertising remains strong, said Ms. Greenhut.

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