Agencies, forecasters and broadcasters speaking at the conferences agreed that ad spending will settle down to stable growth patterns after the comeback from the latest recession, but disagreed on the effect client budget pressures and new technologies will have on the future. Newspaper companies were less optimistic, but said they have adjusted to grow in their new environment (See story below) .
Robert J. Coen, director of forecasting at Interpublic Group of Cos.' Universal McCann, projected national advertisers will continue to spur U.S. ad spending growth of 6.4% next year, to $280.6 billion. Major categories in national advertising, such as automotive and food, held up well during the downturn and continue to spend well, while secondary categories that "cut and ran in 2001," such as telecom and computers, are restoring spending, he said.
However, "local marketers have been very stingy with their budgets," said Mr. Coen. Local advertising will remain weaker next year, with 4.8% growth, while national advertising will grow 7.4%.
In the U.S., the lack of election and Olympic spending will "create a hole" in TV outlays, especially in the network and spot TV categories, said Steve King, chief executive of Publicis Groupe's ZenithOptimedia. Meanwhile, the Internet will continue to establish itself as a mass media, overtaking outdoor with 5% share of spending by 2007, he noted.
"The waters under the surface have been slightly more turbulent" overseas than they appear, said Mr. King. Clients are increasingly demanding accountability in their media buys and procurement-department pressure is growing, he said. "Clients are looking to invest, not spend," he said.
But the tide on procurement pressure is turning, said Mr. Coen. Many advertisers who followed their procurement department's lead and cut budgets to the bone during the recession are finding their brands losing ground to competitors, he said.
"Clients have started to understand that the marketing people are not, as someone told me `the flower arrangers,"' said WPP Group Chief Executive Martin Sorrell. Many marketers have realized their recent profitability came from cost-cutting and now, with nothing left to cut, find they need to engage in brand-building to grow profits, he said. "You've seen the dam break over the last three months."
facts of life
Supply-chain management is a business fact, said David Bell, CEO of Interpublic Group of Cos. But he added that, with more pay-for-performance compensation, agencies and clients are increasingly on the same side.
Procurement officers are not so much fighting their agencies as they are fighting media inflation, said Aegis Group Chief Executive Doug Flynn. Many speakers alluded to high network TV prices in the face of dwindling audience share and new ad-skipping technologies such as video on demand and personal video recorders. Those technologies are cutting into ad viewership and forcing advertisers to seek other media, said speakers.
"It does seem television has reached a stage of maturity," said Mr. King.
Those new technologies are new opportunities, said Time Warner CEO Richard Parsons. "Simply put, people keep consuming more media and entertainment."