Ad spend forecasts revised up for 2005

Interactive predicted to be biggest percentage gainer

NEW YORK — Advertising spending will grow faster than the global economy in 2005, but year-to-year comparisons for U.S. network TV won’t reflect much of it due to a record-setting $1.6 billion spent on political advertising in 2004.

The world’s two leading ad-market forecasters raised their forecasts for 2005 and said interactive advertising would again be the biggest percentage gainer, likely surpassing outdoor advertising in total dollars spent by 2007.

Roger Coen, senior veep for forecasting at Interpublic’s Universal McCann, predicted global ad growth of 6.1%, up from a previous estimate of 5.9%.

Coen said that after several years of caution, marketers are facing the need to freshen up “stale brands” as new competitors enter the market.

Zenith Optimedia topper Steve King said he expects global ad spending to rise 5%, up from a previous forecast of 4.8%, noting that advertising is now growing faster than the global GDP.

China will become the world’s sixth biggest ad market in 2005, overtaking Italy, and should be in the top three by 2011, King said.

Universal McCann expects U.S. network TV ad spending to increase 2% and local spot advertising to grow 6.4% in 2005, while cable TV will grow 7%. Internet ads will be the fastest-growing category at 25%, followed by direct mail at 9.5%.

While cable advertising growth will slow in 2005, King says the drift of ad market share from broadcast to cable will continue.

King said time-shifting technology such as TiVo and other digital video recorders will likely create a premium for advertising buys on shows that are more likely to be watched live, such as sports, news or concerts.

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