Veronis: Ad Spending Will Surpass 2000

Aug 2, 2004  •  Post A Comment

Advertising spending in 2004 will finally top 2000’s record, and traditional advertising will outgrow marketing-services spending for the first time in years, according to the annual forecast by media merchant bank Veronis Suhler Stevenson.

Veronis’ annual “Communications Industry Forecast & Report” projects advertising spending will rise 6.3 percent this year, to $336.7 billion, the first time overall spending has topped 2000’s $319 billion. Advertising growth will outpace the gross domestic product for the first time in four years, helped along by the economic recovery and the surge of spending surrounding the summer Olympic Games and the November presidential election.

For the first time since the start of the recession in 2001, traditional media spending will increase faster than spending on marketing services. Traditional media will jump 7.2 percent, while marketing services will be up 5.1 percent. Marketing services has grown faster or declined less than traditional advertising in the last three years.

The difference is a factor of the economic cycle, said Jim Rutherfurd, executive VP, Veronis. In recessions, when companies are more focused on the bottom line, they lean toward spending on marketing services.

Traditional advertising is benefiting from the effect of the Olympic Games and the election, but the trajectory should continue next year as the economic recovery takes over for those one-time events.

User spending is overtaking advertising as a revenue source for the media companies. New cable channels and new media such as interactive TV are raking in subscription revenues. Those new media face growing pains, since they want to lure advertising revenue, yet their advertising-free nature is a big draw for the early adopters who make up their subscriber base right now.