The Ad Market

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Economy mode: U.S. ad spending typically grows faster than the economy in good times and shrinks faster in bad times. It also takes longer for advertising to dig itself out: Spending (after inflation) under-performed gross domestic product in the 1990-91 recession and 1992-93 recovery. It repeated in the '01 recession and in the '02 recovery (when spending after inflation grew 1% vs. a 2.4% GDP gain). What about '03? estimates inflation at 1.9% and GDP growth at 2.5%. Universal McCann's Robert J. Coen bets on 5% ad growth (3.1% after inflation). ZenithOptimedia's John Perriss sees 2.3% ad growth (0.4% after inflation). If Mr. Coen is right, spending in 2003 will grow faster than GDP for the first time since 2000. If Mr. Perriss is correct, advertising will underperform the economy for the third consecutive year.

AdMarket 50

MANY UNHAPPY RETURNS: Hopes for a year-end rally faded last week as disappointing Christmas sales raised new concerns about consumer spending in the months ahead. Bellwether Wal-Mart Stores lowered its December sales estimate, saying a late surge of pre-Christmas sales was "too late and too little." Economic data were mixed. Good news (the lowest level of initial claims for jobless benefits since October 2001) was muted by bad news (weak orders for durable goods).

Trading was slow as investors took a holiday. But markdowns were the rule, with gains last week for only seven AdMarket stocks and price drops for the remaining 43.

Advertising Age and Bloomberg's AdMarket 50 index of 50 top publicly traded marketer, agency and media companies for the week ended Dec. 27 based on stock trading data supplied by Bloomberg financial news service. All comparisons are vs. closing prices Dec. 20.

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