Universal McCann Forecasts Total of $604 Billion

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NEW YORK ( -- Universal McCann today revised downward its projection for 2005 global advertising spending from 6.1% to 4.8%. For next year, worldwide spending will rise 6% to $604 billion.
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Speaking to a standing-room-only crowd in New York at UBS’s 33rd Annual Global Media Conference, Bob Coen, senior VP-director of forecasting at the Interpublic Group of Cos.-owned media agency, summed up prospects for the coming year succinctly: “We’re not looking for a boom, but we think things are looking a little bit better in 2006.”

U.S. projections
Mr. Coen also revised downward his U.S. projections for spending in 2005, from 6.4% forecast last year to a 4.6% increase over 2004 to $276 billion. National marketers are cautious, he said, despite relative improvement in economic conditions.

“Strong resentment of high media price increases was widespread and ... the pressure for measurable evidence of the return on advertising investments grew,” he said. That, coupled with the continued influence of procurement departments in determining marketing spending resulted in lowered forecasts.

In an analysis of seven top spending categories -- including automobiles, drugs, restaurants, food and beverages -- that account for a large portion of U.S. ad spending, Mr. Coen found that compared to 2004, outlays barely increased over the same period last year.

For 2006, U.S. ad spending will rise 5.8%, he projects, to $292 billion. “The difficulties and expenses of complying with Sarbanes-Oxley should moderate. Uncertainties and cautiousness should diminish and more risk taking with built-up corporate demand should increase the demand for advertising time and space,” said Mr. Coen.

Direct mail
Marketers’ spending in traditional mass media in 2005 has changed little, with one exception: direct mail. Do-not-call regulation, implemented in 2004, resulted in an uptick in spending on mail communication, with 41 billion pieces sent in 2005, up 5% over 2004, and that increase is expected to continue.

Expectations for global spending in 2006 are restrained. “We don’t expect outstanding, across-the-board growth” in key industrialized countries, Mr. Coen said, but there will be improvements in some key countries, in 2006, including Argentina (+15%), Brazil (+23%), Mexico (+10%), China (+20%), Slovakia (+25%) and Russia (+32%). The majority of industrialized countries will grow at a rate of 5% or less next year.

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