Forecasts 2.1% Rise in U.S. Spending

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NEW YORK ( -- Advertising spending will increase 2.1% in the U.S. this year to $236.2 billion and rise 2.1% to $214 billion outside the U.S, according to revised numbers from veteran forecaster Robert J. Coen.

The numbers are slightly lower than a 2.4% growth rate predicted in December by Mr. Coen, senior vice president and director of forecasting at Interpublic Group of Cos.' Universal McCann.

Weak stock market
While the U.S. economy now appears to be in a sustained recovery and showed a strong first quarter, ad spending remains hampered by a weak stock market, which has slowed investments by financial marketers and other advertisers.

Foreign markets are mixed, with parts of Europe and Asia showing improvement, while Japan is expected to be down 4.5% and developing markets are expected to show strong growth.

U.S. spending will benefit from political advertising in the second half, which will hike local ad spending by 2.4%, particularly on local TV, which will grow 5%. But weak cable and magazine growth -- where spending will drop 3.5% and 1%, respectively -- will hold national media spending growth at 1.9%. Spending on food, drugs and toiletries will be down, while movie, restaurant and beverage/snack advertising will rise.

2001-2002 'correction'
U.S. advertising has undergone a "correction" in 2001 and 2002, returning to normal growth rates after nearly doubling between 1990 and 2000, Mr. Coen said. But while advertising growth in 2001 will lag behind the 2.8% growth forecasted for real gross domestic product, ad spending will continue growing as a percent of GDP, he said.

After peaking at 2.51% in 2000, ad spending dropped to 2.27% in 2001, but it will grow back to the 2.5% rate as service industries -- which are more dependent on marketing -- continue to grow faster than manufacturing, he explained.

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