COEN SEES MORE AD GAINS; MCCANN-ERICKSON FORECASTER SEES 7.9% RISE IN SPENDING

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If there were any lingering doubts that the advertising economy is moving into an upward cycle, McCann-Erickson Worldwide Senior VP-Director of Forecasting Robert Coen's midyear update should put them to rest.

Mr. Coen last week revised upward by more than 1 percentage point the 6.8% increase for U.S. ad industry growth he forecast last December. He now believes U.S. ad expenditures will rise 7.9%, to $161.86 billion.

The revision includes a major correction for national ad spending in 1995. Mr. Coen originally forecast national advertising media would rise 6.5%, but now estimates it will grow 8.4%, to $94.62 billion.

Mr. Coen also revised his local ad spending estimate from 7.1% growth rate to 7.2%, which will push local media spending to $67.24 billion.

Mr. Coen said the upward revisions were due to continued improvement in the overall ad economy, particularly relatively large gains in the first quarter of 1995.

Looking ahead to 1996, Mr. Coen predicted the Summer Olympics and the presidential election would contribute to continued healthy ad gains of about 8%, to $175 billion.

Significantly, Mr. Coen predicted that the rate of growth for the U.S. advertising economy would reach parity with that of overseas markets for the first time in nearly a decade. He said overseas ad spending would rise 8%, to $210 billion, and that combined worldwide spending would rise 8%, to $385 billion.

Mr. Coen's upward revision for the domestic ad economy is one more in a series of recent bullish indicators, including the biggest upfront advertising market ever for the 1995-96 TV season and a continuing increase of demand and tightening of supply for most major media in the current marketplace.

Among the top seven product categories, autos had the greatest ad spending growth in the first quarter 1995, rising 20% over first-quarter 1994. Auto spending was up most in magazines (+33%), followed by spot TV (+23%) and network TV (+11%).

Magazines were the biggest beneficiary for all of the top seven categories except for soft drinks, which reduced spending in the medium by 87%. Overall, soft drinks were down 12% in all media, including a 12% decline in network TV and only a 1% gain in spot TV.

The magazine industry's losses in soft drinks, however, are more than made up by other categories, including a 40% gain in food, 24% in cleaners/waxes and a whopping 113% gain in restaurants.

The restaurant category, up 11% overall, also includes significant fluctuations between network (+17%) and spot (+4%) TV, which probably reflects McDonald Corp.'s decision to shift its local TV spending into national buys.

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