Surge Expected to Be Led by Mid-term Elections, Strong Upfront

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NEW YORK (AdAge.com) -- A second-half surge in advertising spending in 2002 will help give a slight boost to overall spending

Photo: Hoag Levins
CMR President-CEO David Peeler predicted ad spending would see a growth spurt in the second half.
for the full year, according to a forecast by Taylor Nelson Sofres' CMR.

Ad spending in 2002 will rise 2.5% over 2001 to $109 billion in U.S. media, said David Peeler, CMR's president-CEO. Mr. Peeler predicted a second-half growth spurt of 6.2% led by political advertising.

Mr. Peeler released the forecast this morning at the AdWatch: Outlook 2002 conference, co-sponsored by UBS Warburg, CMR and Advertising Age.

Better than earlier forecast
As expected, the first half of the year will be down slightly, by 0.4%, but second-half spending will improve each quarter, showing a 5.1% increase in the third quarter over 2001 and a 7.1% increase in the fourth, for a rise of 6.2% for the second half. The second quarter will be down 1.1%, but overall, numbers are still better than CMR had initially forecast last December.

At the time, the forecast called for a 1.5% full-year increase; the first half has not been as bad as initially predicted, but second-half growth, it now appears, will be less positive than initially estimated, Mr. Peeler said.

Sales figures from the network upfront TV market suggest advertisers have begun spending again, and the mid-term elections will spur additional spending in the second half, Mr. Peeler said. He noted new campaign-finance rules will go into effect in November, which should force candidates to spend their "soft dollar" contributions before that deadline. As of May, candidates in gubernatorial and senate races already have spent $100 million, a good sign, Mr. Peeler said.

"If history is any kind of indicator ... this year we're up to a very good start," he said.

Spanish-language media
Some new areas will drive growth, most notably Spanish-language media, Mr. Peeler said. Spending on Spanish-language TV will grow 10.4%, and Spanish-language magazines, outdoor and other media will also grow.

Other media that will also see growth in 2002 include spot TV (up 8.9%), radio (6.7%), local newspapers (5.7%), the Internet (5.3%) and network TV (4.5%). Cable TV will be relatively flat, down 0.3%, while other media will still show a down year: outdoor (down 1%), national newspapers (-1.7%), magazines (-2.8%), syndicated TV (-3.2%) and business-to-business publications (-11.3%).

Possible negatives
There are a few possible negatives in the forecast, most notably slow new-brand activity, a key driver of ad spending growth. Mr. Peeler noted only 72 new-brand introductions in the first quarter, compared to 89 in 2001, and spending on those launches dropped to $644 million from $847 million.

"That new-brand-driving engine is sputtering down," Mr. Peeler said.

The 2.5% increase for the year will still be below 2000's numbers, but it is a slight increase from 1999, which suggests a return to normal growth rates, Mr. Peeler said.

Overall, ad spending growth will outpace inflation, although Mr. Peeler admitted inflation has been rather low lately.

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