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Ad Spending in 2001 Down But Not Out

(BPI) Advertising spending in the United States will grow at a slower rate next year, but fears of a downturn are exaggerated, Universal McCann forecaster Robert Coen said.

Coen, who has been tracking worldwide ad spending for almost 30 years, told the UBS Warburg media investment conference Monday that after the strongest ad market in 16 years in 2000, growth will be a more modest 5.8% next year.

He predicted that total U.S. ad spending across all media will have grown 9.8% in 2000 — the strongest advance since 1984, when presidential elections and Olympic Games also combined to send spending spiraling.

This year's growth would take total advertising spending in the United States to $236 billion, with 20% growth in cable TV networks, an 18% advance in national radio spending, and an expansion of 12.5% in spending at the four major broadcast networks.

The forecast 5.8% growth next year would take total U.S. ad spending to slightly less than $250 billion, Coen said.

Analysts are divided on the extent of a likely slowdown in advertising next year, with some fearing that a dramatic slowing in overall U.S. economic growth could end an eight-year streak of rising ad spending as a percentage of gross domestic product.

Since the 1991-92 recession, ad spending as a percentage of GDP has risen to 2.4% from 2.1%.

Coen predicted the slowdown in spending growth in the United States will be partly compensated by stronger ad spending in foreign territories, led by continued expansion in Europe and rebounds in Asia and Latin America.

Overseas spending should advance 6.5% next year, taking total foreign spending to $244 billion, Coen said.

He also forecasted that Internet and retail advertising will ease next year but said spending from the automotive, telecommunications and computer sectors will remain strong.

Matthew Doman writes for The Hollywood Reporter.

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