A second look at ad spending
Forecaster Robert Coen says recovery will be slower than previously predicted
By Steve McClellan -- Broadcasting & Cable, 7/14/2002 8:00:00 PM
Universal McCann's Robert Coen, one of the more respected forecasters of worldwide ad spending, revised downward his 2002 projection for total ad spending last week, saying the recovery is "coming along slower than we expected" in December, when he made his first detailed projection for this year.
He has some tough predictions for two segments—cable and newspapers—but some encouraging words for broadcasters.
He projects that 2002 total U.S. spending for local and national advertising will be up 2.1% from '01, to $236.2 billion. In December, he predicted total growth of 2.4%, to $239.3 billion.
For national advertising, he predicts 2.6% growth to $61.42 billion, up from the 2.5% previously forecast (see table at right).
One major and negative change in his forecast is for cable TV, which he now believes will see a 3.5% decline in ad sales this year, to $11.5 billion. Six months ago, he thought cable would grow 5.5%, to $12 billion. That's a 9% downward revision, influenced in part by first-quarter figures showing cable-net ad sales down 13.8%, he says. By comparison, the four broadcast networks had a collective increase of 7%.
Coen cites several factors that have converged to impact cable negatively. First, there's the dotcom factor. In the late 1990s and into 2000, dotcoms boosted cable sales significantly; when that sector imploded, cable sales suffered. Package-goods advertisers that had shifted money from expensive broadcast networks to cable shifted back as broadcast prices started to erode.
With inventory increasing as cable networks start up, cable has an oversupply of ad time but "relatively few must-buy positions," he says, adding that "it now appears that it will be difficult for many individual cable-TV networks to avoid posting advertising-revenue declines in 2002."
Coen has also shaved about $1 billion off his forecast for local newspapers, which he now says will be up just 1%, to $38 billion.
On the positive side, he has doubled his growth projection for the four broadcast major networks, predicting combined growth of 7%, to $15.3 billion. National spot TV will spurt 7.5% this year, to $9.9 billion, driven in large measure by what he says could be $1 billion in political advertising this year. Earlier, he had national spot pegged at +5.5%.
Local TV will also be up a little more than he forecast earlier, growing 5% (instead of the earlier projected 4%) to $12.9 billion.
Coen also projects a much healthier increase for radio, especially on the national side, for which he had earlier projected a 1% decline. Now, he believes national radio will rise 6%, to $3.9 billion, and local radio will be up 3.5% (vs. the previously projected 2.5%), to $14.7 billion.
The forecaster also offers a first look at how he thinks 2003 will shape up: U.S. ad spending will grow 5.5%, to $249.2 billion, and worldwide spending will be up a like percentage, to $475 billion.
The bottom line: "There is definite evidence that a turnaround is taking place. But don't get too excited," he urges, because the full effects of the upturn may not arrive for another year.
One of the more encouraging signs is that ad spending in the top seven categories for national TV and print media—autos, food, movies, cosmetics, drugs, beverages and restaurants—was up 1.4% in the first quarter. In first quarter 2001, spending in those categories was down 3%.
| Revising the future | ||
|---|---|---|
| New estimates for 2002 national ad spending put growth at 2.6% | ||
| % chg. from 2002 | ||
| 2001 | ($ million) | |
| Source: Universal McCann |
||
| Big Four nets | +7.0 | 15,300 |
| Spot | +7.5 | 9,915 |
| Cable TV | -3.5 | 11,467 |
| Syndicated TV | +0.5 | 3,120 |
| Radio | +6.0 | 3,887 |
| Magazines | -1.0 | 10,984 |
| Newspapers | +2.0 | 6,747 |
| Total | +2.6 | 61,420 |
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