Ad Spending to Revive in 2004

Sep 8, 2003  •  Post A Comment

The worst of the advertising slump appears to be over as 2004 looks to post double-digit gains over 2003 levels, thanks to a recovering economy and the expected bounce in political advertising spending and Olympics-related spending, according to the Television Bureau of Advertising.

In its annual forecast of television advertising spending trends, TVB expects total spot revenues to grow by 10 percent to 11 percent next year over 2003, driven by an expected 14 percent to 15 percent increase in national spot and a 7 percent to 8 percent rise in local spot.

Cable is likely to see the most significant increase in revenues, with TVB projecting an 8 percent to 9 percent jump in revenue next year, while the networks are expected to see a 7 percent to 8 percent increase and syndication will see increases in the 5 percent to 6 percent range.

In 2005 TVB forecasts that total spot revenues will grow just 2 percent to 4 percent, largely due to the absence of the Olympics and political spending.

TVB’s projections come at a time when the economic picture is beginning to improve, according to David Wyss, Standard & Poor’s chief economist and a guest speaker Sept. 4 at TVB’s annual conference to discuss the spot forecast. The conference was held the McGraw-Hill Cos. headquarters in New York City.

“Advertising is on its way back; the worst is over,” said Mr. Wyss, adding that he expects advertising spending growth to match the growth seen in the overall economy.

Mr. Wyss added that while car sales continue to be strong in a low-interest-rate environment, he expects consumers to ease off their car-buying frenzy once rates start increasing.

Mr. Wyss sees rates beginning to creep upward starting in November 2004-after the presidential election.

Regional Recoveries

The economist also pointed out that unlike past recessions, this most recent economic downturn was quite regional-a fact that advertisers are likely to have to take into account.

For example, regions of the United States that have sizable tourism industries have been the first to recover from the recession, while regions with heavy manufacturing industries continue to suffer because of corporations’ lack of capital spending and the impact of a strong dollar overseas.

The high-tech sectors, which are largely concentrated in New England, Texas and the West Coast, continue to lag as well.

The economic issues come at a time when the advertising model is on the verge of significant change, according to Robert Liodice, president and CEO of the Association of National Advertisers. Describing what he calls a “seismic shift” in the relationship that advertisers have with consumers, Mr. Liodice said consumers are revolting against the proliferation.