Study predicts modest ad growth

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Running counter to the flood of reports showing shrinking budgets, ad spending is expected to grow 6.7% this year and next, according to the latest Schonfeld & Associates "Advertising Ratios & Budgets" annual study.

The study projected ad spending will grow to $255 billion this year from $240 billion in 2000, and climb to $272 billion in 2002.

The Schonfeld study—covering more than 6,300 publicly traded companies and more than 300 industries—takes into account total advertising and promotional budgets compared with other, less rosy ad spending forecasts that tend to focus on major media expenditures, said Carol Greenhut, president of Chicago-based Schonfeld. "Companies that cut back [during a downturn] never recover," she said. "They have to keep their names out there."

Consumer channel change

Greenhut attributed some of the ad spending growth to more b-to-b companies, including IBM Corp. and FedEx Corp., using traditional consumer advertising channels, such as broadcast television, which are more costly that typical b-to-b venues.

The prediction of modest growth in 2002 stems, in part, from increased ad spending on the Internet. Although it may be a few years until the Web proves itself as an effective advertising tool, marketers can ill afford not to invest long term in the medium, analysts say.

The Schonfeld study follows a revised forecast by Robert Coen, senior VP-forecasting director at Universal McCann in New York, a division of the McCann-Erickson advertising agency. Coen recently cut his prediction on U.S. ad spending growth this year to 2.5% from an initial 6.5% and then 5.8%. His latest worldwide estimate is for an increase of 3.7%, down from 7.1% and then 6.1%.

Compared with ad spending in 2001, "everything will look good in 2002," said Alan Jurmain, director-media services at the New York-based advertising agency Lowe Lintas & Partners. "Companies are recognizing that they have to stay active [in the marketplace]."

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