Ad biz gets battered

Forecasters scale back '05 blurb estimates

The U.S. economy recovered nicely in 2005, but the ad biz didn’t, as marketers sat on their hands in the face of Hurricane Katrina, climbing fuel prices and uncertainty over the housing bubble.

Spending trailed economic growth in 2005, causing Bob Coen, director of forecasting for Universal McCann, to revise down his estimates for full-year spending to 4.6% from the 6.4% predicted a year ago.

The final tally is significantly below the growth of the U.S. GDP, which was 6.3% over the course of 2005.

“It was a pretty poor year, and television suffered compared to last year when the broadcast sector got so much more money from the summer Olympics,” Coen said.

Coen predicted only modest gains for 2006, even though midterm congressional elections and the Winter Olympics could normally be counted on to lift spending.

Universal McCann predicted U.S. spending should grow 5.8% to $292 billion in 2006, while international spending would grow 6% to $604 billion.

“We’re not looking for a boom, but we think things will get a little better in 2006,” Coen said at the UBS Global Media Conference in Gotham.

Coen’s predictions were a little more optimistic than those coming from Zenith Optimedia CEO Steve King, who predicted global growth of 5.9% in 2006 and U.S. growth of 5.1%.

Within different media, widely divergent growth rates are expected. Local radio, newspapers and yellow pages are all expected to grow in low single-digits.

CBS head of research David Poltrack predicted broadcast television ad revenue would increase 7% in 2006, or 5% excluding the Olympics.

On the high end, online advertising is expected to grow from $18 billion in 2005 to $30 billion by 2008. Both forecasters excluded paid searches, an emerging category driven by Google and Yahoo! that is also growing explosively.

“The biggest change is the impact of technology, blurring the demarcations in respective media,” King said.

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