Zenith, Merrill see spending slip in '01

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New negative forecasts from Zenith Media and Merrill Lynch & Co. challenge the optimists who say U.S. ad spending will still grow in 2001, however slowly.

The predictions late last week came two weeks after advertising's best-known U.S. forecaster, Robert J. Coen, pronounced U.S. spending will grow 2.5% this year. Mr. Coen, senior VP of Interpublic Group of Cos.' Universal McCann, last December had predicted 5.8% growth this year.

Zenith Media forecast a 2% drop in U.S. ad spending this year in its half-year forecast (AdAge.com, June 29), marking the first decline since the 1991 recession. Zenith's last published outlook, in December, anticipated 4.6% growth in spending in major U.S. media this year. Zenith, owned by Cordiant Communications Group and Publicis Groupe, later downgraded that to 2.4% in an April revision due to the poor first quarter.

Zenith's new forecast for 2001 worldwide ad spending is 1.4% growth, down from 6% last December and a downgrade to 4.8% in April.

Adam Smith, Zenith's head of knowledge management, said the U.S., accounting for more than 40% of the worldwide ad market, played a big part in downgrading the world projection.

In September, Zenith will look at whether further revisions are needed to project numbers for 2001.

"I wouldn't bet on it going up," Mr. Smith said. "Personally I think this may be the bottom in the U.S."

Next year looks better. Zenith predicts 5.9% growth in worldwide ad spending in 2002, with the U.S. growing by 4.7%.

Merrill's new report also said ad spending will dip this year. First VP Lauren Rich Fine, Merrill's advertising and media analyst, last week revised her earlier 2001 U.S. forecast of 2.5% growth to a decline of 0.7%-followed by relatively strong 5.1% growth in 2002.

Mr. Coen in mid-June predicted 5% U.S. ad growth next year.

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