RETAIL, SOFTWARE SPENDING SURGES

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LINCOLNSHIRE, Ill.-Retail stores, computer and software businesses, doll and toy marketers, and financial services companies are leading the growth in advertising this year, according to estimates in Schonfeld & Associates' 18th annual study, "Advertising Ratios & Budgets."

These industries are among those that will post double-digit growth rates in 1994, the study predicts. Other industries expected to show healthy ad increases include catalog and mail-order houses, greeting card companies, radio and TV stations, and videotape renters.

Some segments that will show decreases in ad spending are bakery products, canned fruits and vegetables, cigarettes, jewelry stores, malt beverages, sports and recreation clubs, movie theaters, publishing and security brokers.

The accompanying table, taken from the full report, shows estimated 1994 ad ratios for 200 industries, selected as the ones with the largest dollar volume of advertising.

The full "Advertising Ratios & Budgets" research report covers more than 6,000 individual companies and more than 400 industry sectors. Besides advertising-to-sales ratios, it forecasts 1995 ad spending for each company and industry. The new study also includes sales growth rates as well as advertising growth rates by company.

Looking ahead to next year, Schonfeld says the large, diversified food companies are expected to spend $15.4 billion, up 4.7%. Restaurant chains will show 7.5% ad growth on spending of $1.7 billion.

Advertising by telecommunication service companies will continue to show double-digit growth at 10.3% in 1995 on an estimated base of $8.5 billion in '94. Much of this growth is being fueled by the introduction of new services and changing technology such as digital cellular services.

Interesting industries to watch include cyclical businesses such as construction, machinery and financial services. The recovering economy will strengthen these industries and their ad spending.

"Advertising Ratios & Budgets" is compiled from various sources including annual reports and 10-K reports. Since reporting may vary from company to company, careful use of the findings is advised. Eugene P. Schonfeld, author of the study, urges caution when:

Financial events such as mergers, acquisitions and divestitures may distort spending patterns.

Private ownership of very large companies in specific industries may mean that some advertisers are omitted.

Multi-industry companies are reported only in their primary industry based on sales of their dominant line of business.

Copies of the 211-page study are available at $325. Contact Schonfeld & Associates, 1 Sherwood Drive, 60069. Phone: (708) 948-8080.

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