Advertising Forecasters Expect Modest Growth for 2007

From UBS Conference: Coen, King Differ Over Predicting Internet's Impact

By Published on .

NEW YORK ( -- The advertising forecast for 2007 coming out of investment bank UBS' 34th

ZenithOptimedia's Steve King sees guaranteed continued growth for the internet.
Download Chart:
Zenith Optimedia Forecast Chart
Annual Global Media & Communications Conference being held this week was decidedly mild. Even with major growth projected for internet spending, Robert Coen, senior VP-director of forecasting, Universal McCann, sees only 4.8% growth in ad spending in national and local advertising in 2007. Steve King, CEO-worldwide, ZenithOptimedia, predicted only 4.2% growth.

Messrs. King and Coen are in agreement that ad spending -- usually an exaggeration of the general trend of the global economy -- has tracked much more on par with the global economy and will continue to do so. For 2006, Mr. Coen now believes U.S. ad spending will end the year 5.2% above 2005, rather than the more bullish 5.8% forecast a year ago.

Difference of opinion
With lines between advertising mediums becoming more and more blurred, the question of where and how to fit the internet into predictions has become a topic of debate, as seen by Mr. Coen's decision to leave internet search spending out of his numbers and Mr. King's decision to leave it in.

"We're at a tipping point in media consumption ... and changing social behavior, blurring the lines between different media types," Mr. King said. "We call it 'media mutation.'" He expects this will be one of the last years when forecasts will break down into distinct media columns.

That said, both see double-digit internet spending and that the web will continue to be a major driver of media spending. Mr. Coen predicted 15% growth and Mr. King predicted 28.2% growth for the medium.
Universal McCann's Bob Coen has left internet search spending out of his numbers.
Universal McCann's Bob Coen has left internet search spending out of his numbers.

Why the difference? Mr. Coen sees the numbers on internet spending as the "most volatile" of all numbers available, and he prefers to forecast conservatively until he sees objective measurements he can trust.

Growth will continue
Mr. King, on the other hand, based his prediction on the fact that internet spending has overtaken outdoor spending in 2006 and is set to overtake radio spending by 2009. He sees the continued growth as guaranteed, given that internet penetration is only 70% in the U.S. and 17% globally. In addition, time spent on the internet is still only 20%-25% of total time spent with all media, so there's room for significant growth.

"We anticipate the gap between media time and ad spend to close," he said.

While spending on the TV networks is expected to be down in 2007 -- due in part to poor performance on the part of new broadcast networks CW and MyNetwork TV, as well as a lack of global events such as the Olympics and a U.S. election to drive spending -- Mr. King does expect product placement to continue to grow as a means to circumvent consumers opting out of advertising or fast-forwarding ads using digital video recorders.
Most Popular
In this article: