INSIGHTanalysis: Prospects Remain Good For US Ad Market

Myers says that the increase reflects better-than-expected revenues among newspapers and consumer magazines. Projections for local and national spot television are unchanged but the local cable growth estimate has been lowered from 15% growth to 12.5%.

The increased outlay on press advertising has come at the expense of other media. The growth forecast for broadcast network spending has been cut from 4% to 3% while radio revenues are likely to rise by 1.8% this year, less than the 2% anticipated.

“These latest forecasts reflect my overall confidence that network TV scatter and local television and radio spending will begin picking up in later October and remain robust through the end of the year as retail confidence increases and advertisers battle for market share,” said Myers.

The current level of advertising activity and encouraging economic indicators have influenced Myers to alter his outlook for 2004. In May, he predicted that expenditure would swell by 5.3% to almost $172 billion. However, prospects for newspapers and magazines have improved with revenues set to climb by 3.2% and 7.6% respectively. The radio sector also looks positive and total adspend is expected to be up 6.1% at $174 billion next year.

Long term forecasts The presidential election and the Olympic Games are expected to provide an impetus for ad growth in 2004 (see Ad Market Begins To ‘Climb Out Of The Bath’, Says WPP). Nonetheless, Myers warns that it could still be a difficult year for media companies that fail to put in place a differentiated selling proposition. The 2004/05 upfront season is predicted to be tough and network TV is forecast to grow by just 1% next year, with total media spending slowing to 2.2%.

There are more promising signs for 2006 and barring dramatic changes in the economy or an unexpected change in the administration in Washington, Myers is projecting growth of 4.5% in US adspend taking the total to $185 billion.