Ad Spending Set to Rise 4.8% in 2007

Dec 11, 2006  •  Post A Comment

No Olympics and no elections will spell slower television advertising spending in 2007, according to a report released last week by Universal McCann Senior VP and Director of Forecasting Robert Coen.

Mr. Coen forecast a growth rate of 4.8 percent in total U.S. ad spending next year to $298.8 billion, down from the 2006 rate of 5.2 percent, which in itself is lower than what was forecast a year ago when Steve King, CEO-worldwide at Zenith Optimedia, predicted 4.2 percent growth.

Beyond the lack of an Olympics or election in 2007, “there is considerable concern about economic softening as energy prices bounce up and down and the housing sector continues to show signs of weakness,” Mr. Coen noted in his annual report, presented last week at a media investor conference sponsored by UBS in New York.

The drop in ad spending may not last long. Mr. Coen went on to say that 2008 is poised for significant improvement.

“Companies’ balance sheets are in great shape, and they are loaded with cash,” he wrote. “If aggressive competition begins to heat up, it will be inevitable that higher levels of advertising reappear, but it seems unlikely that this will develop early in 2007.”

In the television industry, Mr. Coen is projecting 2007 growth of 3 percent for network television and flat growth for national spots. Both of those figures are down compared with 2006. This year ad budgets of national advertisers for big four television networks were projected to rise 5 percent for a take of $16.9 billion, while spot ads were up 11 percent for an $11.1 billion haul.

Ad spending for cable and syndication both will rise in 2007, climbing 6.5 percent and 6 percent respectively, Mr. Coen said. In 2006, the cable industry showed growth of 4.5 percent for the year to $19.1 billion. Syndicators found themselves working with 5 percent growth as 2006 levels are posed to hit just above $4 billion.

While local radio and newspaper advertising will slow to a crawl in 2007, showing increases of 2 percent or less, local television advertising is projected to jump 4 percent year-to-year. That projection for local TV is down from 2006’s increases of 5 percent.

Globally, Coen is forecasting 2007 worldwide advertising to rise by 5.3 percent to $631.4 billion.