Universal McCann Predicts Positive Outlook For 2005

Bob Coen, director of forecasting says he now can predict that US and overseas companies will experience a slightly higher rate of ad growth than previously expected, and that final worldwide advertising expenditures, in local currencies, will expand by 6.4%, in contrast to last years’ forecast of 5.8%.

Mr Coen told Insight: “We’ve got a lot of postponed advertising because the economic growth was slow in 2004. Now the economy is firming up advertising is finally firming up, when business is lousy people don’t want to put their money into advertising”. He continued: “The biggest surprise for 2005 is the large increase in direct mail advertising, although this has been exceptionally hard to explain, the supposed reason could be because of the don’t call regulations.”

Within the national advertising categories, the Internet is again expected to be the fastest growing medium with a 25% gain, cable networks and magazine are also predicted to perform well during 2005.

In US advertising a gain of 6.4% to $280.6 billion is now forecast for 2005 and, assuming no change in exchange rates, the overseas total for advertising spend is expected to reach $272.8 billion, increasing by 5.8%. This brings the predicted 2005 worldwide advertising spend to $553.4 billion, a increase of 6.1%. It is expected that in 2005 total national advertising expenditures in all media will be up by 7.4% to $178,254,000,000 and the re-expansion of the Internet is expected to result in large double digit gains. However, the explosive 2004 gains in television due to the Olympics and the elections will moderate in 2005.

Continued re-expansion of the ad budget is expected in 2005, however, the return to higher, more traditional advertising spending levels is still to come.

Dot com advertising in consumer media is expected to continue up upwards trend in 2005. However, as the Internet grows so does its competitors and paid search spending could compete with these consumer media advertising spends.

If advertising trends mimic those of 1995 and 2000, Mr Coen forecasts advertising, as a percent of gross domestic product, to rise to close to 3%.

In Europe Mr Coen says that Slovakia, Spain and the UK are set to accelerate, while worldwide, China, Indonesia, and Russia are predicted to do well.

Worldwide Advertising Expenditure Forecasts
	US		Non-US		Global
	$bn	% Change	$bn	% Change	$bn	% Change
1990	130	3.9	145.9	11.8	275.9	7.9
1991	128.4	-1.2	153.9	5.5	282.3	2.3
1992	133.8	4.2	165.4	7.5	299.2	6
1993	141	5.4	163.2	-1.3	304.2	1.7
1994	153	8.5	179	9.7	332	9.1
1995	165.1	7.9	205.9	15	371	11.7
1996	178.1	7.9	212.1	3	390.2	5.2
1997	191.3	7.4	210	-1	401.3	2.8
1998	206.7	8	205.2	-2.3	411.9	2.6
1999	222.3	7.6	213.8	4.2	436.1	5.9
2000	247.5	11.3	226.8	6.1	474.3	8.8
2001	231.3	-6.5	209.6	-8.6	440.9	-7.9
2002	236.9	2.4	213.6	1.9	450.5	2.2
2003	245.5	3.6	244.4	14.4	489.9	8.7
2004F	263.7	7.4	257.8	5.5	521.5	6.4
2005F	280.6	6.4	272.8	5.8	553.4	6.1
Source: Universal McCann, December 2004

US Advertising Growth Forecasts (%)
	2004	2005 F
National	8.9	7.4
Local	5.1	4.8
Total	7.4	6.4
Nominal GDP	6.6	5.5
Source: Universal McCann, December 2004

UNIVERSAL MCCANN US ADVERTISING GROWTH FORECASTS
	2004 6/04 Forecast	2004 12/04 Forecast	2005 12/04 Forecast
National
Four TV networks	10	9.5	2
Spot TV	9	10	-1
Cable TV	14	12	7
Syndication TV	13	15	3.5
Radio	7	2	5.2
Magazines	5	6	7.3
Newspapers	6.5	5.5	6.8
Direct mail	6.5	8	9.5
Yellow pages	1	1	5
Internet	20	25	25
Other media	7.2	7.8	5.6
Total	8.3	8.9	7.4
	Â	Â
Local
Newspapers	4.5	4.5	5.5
TV	8	8.5	2.5
Radio	6	4	5
Yellow pages	2	1	3
Other media	8.2	7.5	6.1
Total	5.5	5.1	4.8
Source: Universal McCann, December 2004