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More advertising growth seen in ’04

Two leading forecasters predicted further gains in advertising spending for next year, thanks mainly to a combination of continued economic growth, the summer Olympics and the U.S. presidential election.

Two leading forecasters predicted further increases in advertising spending for next year, thanks mainly to a combination of continued economic growth, the summer Olympics and the U.S. presidential election.

SPEAKING AT AN annual investors conference Monday hosted by the UBS Warburg investment bank, Robert Coen of Universal McCann and John Perriss of Zenith Optimedia both issued upbeat forecasts for 2004.

Coen, who is often seen as more bullish than other forecasters, predicted 6.9 percent growth in all U.S. advertising spending for next year, versus an increase from the 5.2 percent estimated for 2003.

Coen, the top forecaster for Universal McCann said more growth would be seen in national versus local advertising due to factors such as the upcoming presidential election and the Olympics. This double boost to advertising spending is known as the “quadrennial effect” since it occurs every four years.

The fact that the summer games are being held in Greece this year may result in even more promotional spending than otherwise, Coen said.

Local advertising, meanwhile, continues to be held back somewhat by insecurity about jobs, which has led consumers to keep a tight hold on discretionary spending, Coen said. As a result, Coen foresees 6.0 percent growth in local advertising next year versus 7.4 percent for national advertising.

In addition to signs of growth in the economy, Coen said another encouraging indicator for advertisers was that after sharp declines in advertising usage in 2001 and 2002, advertising began to outpace economic growth in 2003 and should continue to do so next year.

Perriss, the chief executive of Zenith Optimedia, a global advertising firm, also predicted more advertising growth for the United States and other countries for next year, but as is often the case he was less bullish than Coen.

Perriss, whose forecasts don’t include Yellow Pages, direct mail and other forms of advertising grouped into Coen’s report, forecast 3.0 percent growth in advertising for the U.S. market and 3.4 percent growth for global advertising.

Continued expansion in consumer spending is an encouraging sign for advertisers, Perriss said, but he noted that high levels of consumer debt were likely to limit the potential gains there.

Growth in corporate profits, another key driver of advertising spending, holds more promise, Perriss said, particularly since profitability was improving more quickly at large companies which tend to spend more on advertising than smaller ones.

“This recovery is mainly driven by large advertisers, not necessarily certain sectors” of advertising, Perriss said.

By region, Perriss predicted that Asian countries excluding Japan would continue to show the strongest growth, increasing 9 percent next year versus 2003. Yet even when the relatively flat growth of 0.8 percent in Japan is included, the growth in Asia next year is still expected to come in at a healthy 5.1 percent, he said.

The European market will continue to be held back by weak economic growth in its largest countries, France and Germany, Perriss said, resulting in regional growth of just 1.8 percent in advertising.

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