COEN: AD SPENDING IN '98 WILL OUTPACE OVERALL ECONOMY: 6.2% RISE SEEN IN U.S. EXPENDITURES

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Advertising expenditures will keep ahead of economic growth, Robert Coen, senior VP-director of forecasting at McCann-Erickson Worldwide, New York, told the 25th annual PaineWebber Media Conference last week.

While the macro-economic picture doesn't look as flush in 1998 as in 1997, a still-strong economy, low unemployment and continuing consumer confidence are still helping the ad industry in the U.S., he said.

Mr. Coen projects that even as the growth of the gross domestic product slows to 2.5% in 1998 from 3.7% this year, total U.S. advertising expenditures will rise 6.2% -- to $198.4 billion -- next year from $186.8 billion in '97.

Additionally, national media spending will rise 6.3% to $116.9 billion from $110 billion.

'97 BETTER THAN EXPECTED

The current year beat even the optimistic assessments made in late '96, said Mr. Coen, who had projected total growth this year of 5.6%. Expectations were low at the end of '96, but as unemployment continued to fall and the economy remained strong, marketers raised their ad budgets in midstream, he said.

Expenditures among the top seven marketer categories were up 7.3% in the first eight months of 1997 compared to the same period in 1996, when they were helped by spending on the Summer Olympics, said Mr. Coen. He also noted the secondary categories are still spending more overall, thanks to double-digit increases among the computer and resorts/tours segments, up 16% and 13%, respectively. That made up for double-digit drops in airlines and insurance, down 16% and 10%, respectively.

6.8% RISE FORESEEN WORLDWIDE

John Perriss, chairman-CEO of Zenith Media Worldwide, London, projected that worldwide ad expenditures will rise 6.8% this year, to $298.8 billion, and 6.3% to $317.8 billion in 1998. Although global expenditures will grow, they will fall behind GDP growth as expenditures overreact to the economic cycle, hitting higher peaks and lower troughs, said Mr. Perriss.

In Europe, GDP growth will peak in 1998 as the conversion to a single currency leads governments to force austerity on taxpayers, said Mr. Perriss. Adjusted for inflation, European expenditures are only expected to grow 1.8% over 1997.

The Asia/Pacific region, on the other hand, will continue to be adversely affected by the Japanese currency crisis, he said. The crisis in Japan, which accounts for 57% of the media spending in the region, has forced regional spending forecasts down 2%, despite a promising Chinese market and the resilience of markets such as Indonesia, said Mr. Perriss.

While overall Asian spending will grow by 3.9% on an inflation-adjusted basis,

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