WORST AD SPEND DECLINE SINCE GREAT DEPRESSION

Merrill Lynch Predictions Liken Current Downturn to '100-Year Flood'

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NEW YORK (AdAge.com) -- Merrill Lynch & Co. analysts downgraded their ad spending forecasts again, predicting the first two-year decline since the Great Depression.

In a research note released today, broadcasting analyst Jessica Reif Cohen said the Internet bust and lack of political and Olympic ads combined with the Sept. 11 attacks to create a "100-year flood" event.

But while this recession is behaving similarly to the Gulf War period, she noted the increased ad inventory on cable has put additional pricing pressure on television advertising thatwill persist through the first half of 2002.

Merrill's forecast now calls for a U.S. ad spending drop of 3% in 2001 -- or a drop of 4.5% excluding direct mail -- and a drop of 1% in 2002; it also assumes economic stimulus efforts from the federal government, the Winter Olympic Games and Congressional elections will combine for a second-half recovery in 2002.

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