A prominent forecaster of advertising trends boosted his estimates for advertising spending in 2004 on Tuesday, saying that the effects of the economic recovery were finally spilling over into marketing budgets.
Bob Coen, director of forecasting at the Universal McCann advertising agency, said national advertising spending was showing signs of strength in the first few months of the year, and was expected to gain more momentum as the year goes on thanks to the Summer Olympics and the presidential election.
Speaking in a twice-yearly presentation to advertising executives, Coen said he now expects total U.S. advertising spending to increase 7.3 percent in 2004, versus the forecast of 6.9 percent he made in December.
“The important users of advertising are coming back and raising their budgets,” Coen said. “A strong recovery in advertising is now catching up with the economic recovery.”
Noting that advertising spending usually takes longer to recover from a downturn than does the overall economy, Coen said that ad spending expansion was poised to outpace growth in the economy.
“Economic expectations are much brighter” than they were in December, Coen said. “A sustained economic expansion is in place.”
In revising his forecasts, Coen said he now expects national advertising spending to recover at a greater pace in 2004 than local advertising, which has been slow for a number of years due partly to price competition.
Coen said that several industries that led the advertising boom of 1999-2000 such as telecommunications companies were beginning to expand their budgets again, but he also noted that retailers, among others, were not yet jumping back in. “They’re not going to do it until their competitors do,” Coen said of retailers.
He also noted the prospects for an advertising recovery could be compromised this year by the continuing conflict in Iraq as well as instability in consumer and business spending.