War No Drag on U.S. Ad Spending4/13/2003 08:00:00 PM Eastern
Rather than toppling over like a statue of Saddam Hussein, U.S. ad spending should rise nicely this year. But the picture for European and Asian markets is not nearly as bright.
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ZenithOptimedia thinks the war in Iraq isn't having much of an effect on U.S. spending. In a report last week, the media-services giant boosted its estimate of U.S. ad spending to $146.7 billion this year, a 2.2% hike from last year. Its previous forecast, issued in December, predicted growth of 1.9%.
"U.S. advertisers are so far unfazed by jumpy consumers or the outfall of war," the report said. "There are pockets of strong advertiser demand."
Some advertisers were hesitant in the weeks leading up to the first U.S. attack on Baghdad, but that's largely dissipated, according to Rich Hamilton, CEO of Zenith's U.S. division. "This war was not going to be a four-day war."
Television should remain the biggest beneficiary, as evidenced by the strength of the scatter market. "Generally, in times of volatility, especially in times that are soft, the magazine business tends to get hit harder," Hamilton said. "Newspapers, the driver of retail, do well. ... But television is where the horsepower of advertising is."
Spending by European advertisers is seen as much weaker, up 0.4% in the five largest countries. France should be up 1.1%, but spending in Germany is seen dipping 0.9%. Japan should also see slower growth, 0.8%.
U.S. ad growth is expected to be stronger because of its different ways of responding to the recession. U.S. companies have aggressively laid off workers and reduced other costs. The resulting profitability "underpins the confidence to advertise," Zenith said.
Regulation and culture make it harder for Western European and Japanese companies to wield chainsaws. European "investment spending is expected to shrink for the third year in a row this year (-0.3%) and is struggling to go positive in Japan (0.1%), whereas the US is expected to bounce back at 2.9% after two years' heavy retrenchment," Zenith said.