ZENITH REPORT: AD SPENDING TO WORSEN

Published on .

Aug. 31, 2001

By Laurel Wentz

NEW YORK (AdAge.com) -- A pessimistic Zenith Media just made 2001 even gloomier by more than doubling its projected

decline in U.S. ad spending this year to 4.2% from 2%.

Predicting doom with growing speed, Zenith's latest cuts in projected ad spending come only two months after the now-outdated 2% drop replaced the last positive forecast, made in April, for 2.4% growth in the U.S. ad industry this year.

Zenith offers scant hope for 2002, when U.S. ad spending is now forecast to grow by an imperceptible 0.1%.

Europe to see drop
Elsewhere in the world, Zenith's new outlook predicts ad spending in the five biggest European markets will fall by 1.8% this year -- Germany is expected to be the hardest-hit with a U.S.-like decline of 4% -- with some recovery next year to 2.7% growth in Europe.

Zenith attributes the increasingly dire scenario to the drop in corporate profitability among the world's largest advertisers, the end of the dot-com boom and fear of unemployment.

The U.S. network TV upfront market has led the way downward with a drop of about 14%. Overall, total TV ad spending is forecast to fall by 4% this year. Radio will be down by 7.8%, magazines by 5% and newspapers by 4%, according to Zenith. Internet advertising is forecast to grow by 10%.

Bright spot: direct mail
One of the few bright spots is direct mail, forecast by Zenith to grow by 5% this year. Zenith's quarterly update to its twice-yearly worldwide forecast covers just the U.S., the five biggest European countries and Japan, but those markets account for 75% of global advertising expenditure, according to Zenith.

"We had hopes of a return to real growth in 2002," Zenith said its quarterly update. "This will not now happen in the big markets, which we now expect will shrink 2.6% this year, and grow only 0.8% in 2002. We expect to report similar deterioration in many smaller countries in our worldwide December forecast."

Copyright August 2001, Crain Communications Inc.

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