With the economy diving faster than expected and the near-disappearance of dot-com ad spending, the 5.8% prediction is "going to come way down," said Mr. Coen, senior VP of McCann-Erickson WorldGroup's Universal Mc-Cann.
"Those are two factors that are going to be very disruptive," said Mr. Coen, who formally announces the midyear projection June 14. Mr. Coen last week was working on the revision, an update of the forecast he made in December.
Mr. Coen's lower 2001 projection will show total spending still will rise, thanks to rate increases, mostly in the print media, yellow pages, outdoor and other non-broadcast media.
His projected rise comes despite data from Taylor Nelson Sofres' CMR that shows year-over-year spending fell each month from December 2000 through March 2001. First-quarter spending for 11 traditional media was down 6.7%, according to CMR data.
Mr. Coen said print media will try to push up prices to make up for postal-rate and other cost increases, and they will be able to push them through because advertisers must have some of those media in their plans.
Broadcast media won't be able to do the same due to the weak upfront market and recent cost-cutting arrangements with advertisers, such as the recent Viacom/Procter & Gamble Co. cross-media deal (AA, May 7), Mr. Coen said. Cable may be the one exception, since advertisers appear to be shifting buys from broadcast networks to cable thanks to the ability to reach more concentrated demographics at cheaper rates, he said.
Data compiled by Mr. Coen for Interpublic Group of Cos.-owned Universal McCann show U.S. ad spending since 1990 has increased every year except for 1991, which was the last year that saw a decline in gross domestic product.
While advertising's shortterm outlook looks grim, the long-term trend has some encouraging signs. As the U.S. economy becomes more service-oriented, advertising as a percent of GDP will continue to rise.
Meanwhile, Mr. Coen has revised upward his 2000 and 1999 total ad spending based on analysis of data from the U.S. Census Bureau's 1997 U.S. Economic Census.
The revised 1999 and 2000 totals mean 2001 will be a more difficult comparison, even without the effect of the economic slowdown on ad spending. Total spending for 2001 will get no boost from elections, ad spending to support the U.S. Census, Olympic advertising or millennium-kickoff promotions.
Mr. Coen revised ad data for the past two years based on an analysis of Census Bureau economic data that provided clearer information on ad revenue from cable network and local cable advertising, as well as a more accurate total for out-of-home media, including billboards, transit and other out-of-home signage.
Total U.S. ad spending in 1999 was $222.31 billion, not the $215.30 billion Mr. Coen had tabulated before, and ad spending as a percentage of GDP was 2.39%, not 2.32%. Meanwhile, the 2000 total rose to $243.68 billion from $236.33 billion, a record 2.45% of GDP.
However, the larger spending in 1999 meant that, even with increased dollar spending in 2000, the rate of growth over 1999 appeared to drop-to 9.6% last year, vs. the 9.8% Mr. Coen had reported in December.
Mr. Coen's revised previous-year data showed newspaper and TV network advertising grew faster in 2000 than he earlier had reported.
The now-ailing Internet was king of all media in the previous-year revisions. While still racking up a hefty 53% growth in 2000, that was lower than the 65% December tally. The shift was a result of an upward revision on the Internet total for 1999 to $2.83 billion from $1.94 billion.