Most ad prognosticators expect a healthy 1996-it is, after all, an Olympics and presidential election year. The discrepancies are in exactly how robust those gains will be, and what happens after next year.
Bob Coen, senior VP-director of forecasting at McCann-Erickson Worldwide, and the official source for much of the ad industry's statistics, predicted the U.S. ad economy will rise 7.8% to $174.1 billion. That would be the greatest rate of increase in eight years, significantly outpacing a 5% expected rise in the U.S. gross domestic product.
While others at last week's PaineWebber Media Outlook conference predicted healthy growth in 1996, they were not quite so sanguine. Media industry consultant Jack Myers, for example, forecast only a 5.9% rise in measured U.S. media spending to $100.1 billion. (Mr. Coen's estimates include non-measured media and other forms of advertising including sales promotion.) Factoring out inflation, Mr. Myers predicts a real growth rate of only 2.7%.
Zenith Media Worldwide Chairman John Perriss predicted North American measured media spending would rise 6.2% to $103.95 billion. Factoring out inflation, that growth would be 3.1%.
While Mr. Coen has a reputation of being overly optimistic, in recent years he has been close to the mark and, if anything, has underestimated U.S. ad growth.
But some still believe he is too bullish, especially in his prediction that advertising will outpace the growth in the nation's economy through the year 2000.
"I just don't see it," said Mr. Myers, president of Myers Communications. He said there are troubling indicators in the media marketplace that could lead to a downturn before the end of 1996.
In fact, the fourth-quarter network scatter market was virtually non-existent, indicating many upfront advertisers simply overbought. Another troubling sign is an abundance of direct response TV ads; those advertisers pay a fraction of general market ad rates, because they are buying what is earmarked as remnant time.
Zenith's Mr. Perriss also doesn't see sustained high growth, predicting North American ad spending will rise only 4.7% in 1997 and 4.4% in 1998. Factoring out inflation, those increases would be 1.4% and 1.1%, respectively.
But Mr. Coen remains optimistic that "we're back into a very robust expansion of advertising."
He said his belief is based partly on a so-called "lag effect" theory that the ad business is slow going into economic recessions and slow coming out.
Mr. Coen pointed to some fundamental shifts among some marketers that indicated an upward swing in ad spending, including a rebound by categories such as liquor and tobacco.
More significantly, he said major marketers like Procter & Gamble Co. are moving from price promotions back into advertising.
He cited a drop in the average coupon redemption rate to 6.2%, the lowest since 1984.
Among specific U.S. media categories, Mr. Coen said TV will be the biggest beneficiary in 1996. He forecast the Big 4 broadcast networks would rise 12.5% to $13.05 billion, national spot TV would be up 8% to $10.1 billion and cable and syndicated TV would jump 14% to $5.3 billion.
Despite continued problems in many retail categories, Mr. Coen said the Olympics and elections would help boost local broadcast ad spending 8.3% to $20.405 billion.
Mr. Coen's prediction is significantly higher than Mr. Myers', who forecast only a 4% rise for national spot TV, a 3.5% gain for local TV, a 6% rise for radio, a 4% increase for TV syndication and a 6.5% improvement for the broadcast networks. However, he does anticipate cable TV will jump 18% to $4.85 billion.
Even CBS Exec VP-Research and Planning David Poltrack had a more conservative outlook for network ad spending in 1996. Mr. Poltrack said network ad growth would only approach double digits in 1996, and settled on a 9.5% growth rate for his estimate.
Mr. Coen didn't offer an estimate for interactive media, which he said was impossible to "calibrate" yet.
Mr. Myers forecast interactive ad spending would rise 26% to $420 million, accounting for less than half a share point of his U.S. media total.
Charges of over-optimistic projections against forecaster Bob Coen don't appear to carry much weight.
Early Late Actual
proj. proj. incr.
1992 6.2% 4.5% 3.9%
1993 6.9% 5.2% 5.2%
1994 6.3% 7.9% 8.7%
1995 6.8% 7.7% -
Early projections made in December of previous year; late projections in December of same year.