Forecaster Lowers 2005 Ad Spending View

A closely watched advertising forecaster lowered his estimate of 2005 ad spending Monday, saying marketers were much more cautious than he had anticipated.

Bob Coen, the director of forecasting at the Universal McCann ad agency, said next year was shaping up to be somewhat better, however, as the Winter Olympics and mid-term elections were likely to lift advertising budgets.

Coen, speaking at a media conference sponsored by the UBS investment bank, said 2005 was turning out to be a "pretty poor year" for advertising as major national marketers "held the lid" on their ad budgets.

Coen said he now expected advertising spending to grow just 4.6 percent for all of 2005, versus his previous forecast of 6.4 percent.

Other forecasters have also lowered their expectations for growth in advertising this year. Merrill Lynch now sees growth of 4.2 percent, while Sanford C. Bernstein expects 4.6 percent.

In his annual report, Coen cited sluggish stock prices by major marketing companies, a drive to keep costs low, and resentment among major marketers for recent advertising price increases as factors behind the tepid rate of ad growth.

Some national marketing sectors did show solid growth in 2005, Coen said, as advertisers seek out more targeted means of reaching consumers. Cable TV, direct mail and Internet spending all increased, while radio, network TV and newspapers had weaker growth.

On a global basis, the British firm Zenith Optimedia predicted that advertising in all major markets in the world would grow 4.8 percent this year, just a hair below its previous forecast of 5 percent.

Zenith also forecast a more rosy outlook for global advertising growth in 2006, particularly as burgeoning economies like India and China grow disproportionately faster than the United States and Europe.

Steve King, the CEO of Zenith, told investors at the UBS conference that Brazil, Russia, India, Indonesia and China collectively represent about 8 percent of global advertising spending but accounted for 30 percent of the growth in 2005.

Zenith now sees global advertising spending growing at a rate of 5.9 percent next year, King said.