Positive Outlook on Mad. Ave.

Jul 7, 2003  •  Post A Comment

Optimism is in flower again on Madison Avenue.
The latest ad-spend forecast, from TNS Media Intelligence/ CMR, predicts that television advertising will be robust in 2003, paced by Spanish-language television (expected to be up 16.9 percent over 2002), followed by syndication (expected to be up 9.6 percent), network cable (up 7.2 percent), network broadcast (up 2.8 percent) and spot (up 1.8 percent).
That full-year ad-spend forecast was unveiled at AdWatch: Outlook 2003, a recent one-day conference held in Manhattan and sponsored by TNS/CMR, which predicted an overall 4.3 percent increase in ad spending this year, and Advertising Age, TelevisionWeek’s sister publication.
Reasons for the “healthy” outlook include the “strong upfront season, the continued rise of Hispanic media spending, the active political environment and the steady growth of new-brand spending,” according to TNS/CMR. “Even without the peaks found in years where Olympics spending and presidential election activity buoy overall spending, 2003 is expected to continue the sustained growth we’ve tracked since the third quarter of 2002,” said Steven Fredericks, TNS/CMR’s president and CEO. Other reasons fueling that rising sense of optimism:
* The possibility of a “consumer resurgence, albeit a brief one,” following the recent recession, according to Lauren Rich Fine, first VP, managing director, Merrill Lynch. “Corporations should spend into that” with increases in their ad budgets, she said.
Post-Sept. 11 and the Iraqi War, the consumer mindset has changed, Ms. Fine added. Consumers are “looking at their lives differently and [are] probably willing to spend more of their income … to enjoy life … and try to fulfill their dreams.”
* The emergence of 50-plus as a new desirable demographic will also add to ad revenue, according to Joe Abruzzese, president of advertising sales, Discovery Networks U.S.
* A sense among advertisers that “if you actually stop advertising or stop investing … you’re going to lose share,” said Robin Kent, worldwide chairman and CEO, Universal McCann. “In these days, you can’t afford to lose share, because [the loss of] one or two share points is going to cost you millions to come back.”
* New product introductions are “back,” said Steve Blamer, president, Grey Worldwide New York. “I’m seeing a lot of new product introductions, line extensions, things … that are scheduled for the third and fourth quarter.”
Despite the overall sense of optimism, the likelihood of high scatter prices continues to worry ad agency executives. “Clients are getting hosed” in scatter is how Jon Mandel, co-CEO, chief negotiating officer, Mediacom, put it. Other AdWatch worries:
* The “frightening” size of research budgets, Mr. Mandel said. That cost is now so great, he added, that agencies have to grow bigger simply to amortize it.
* The increased influence of bottom-line-minded procurement officers on the agency-advertiser relationship. “We have to be always on guard against letting the supply sergeants run the shop, but the supply sergeants are a reality of life … in publicly held companies that [have] fiduciary responsibilities,” said J. Patrick Kelly, president of US Pharmaceuticals, Pfizer.
* The mixed impact of agency consolidation. “There’s bad big and bad small,” said David Bell, chairman and CEO, The Interpublic Group of Companies. “There’s good big and there’s good small. The only really ugly place is not to be big enough against your competitive set.”
Andy Berlin, chairman, Berlin Cameron/Red Cell, which he founded in 1997, noted wryly that he sold his once-independent agency to WPP Group not simply for the money, but because his client, Coca-Cola made it “directly and perfectly clear to us that if we did not sell to IPG or WPP we’d lose that client.”
Both IPG and WPP Group are holding companies that include multiple international agency brands.