Ad spending to slow through 2007
EmptyNEW YORK -- A longtime Madison Avenue forecaster is revising downward his predictions for 2007 ad spending to 4% growth worldwide.
That compares with the 5% increase that Universal McCann's Robert J. Coen had predicted in December, before full data came in that he said showed a drop in advertising demand last year. This year, without major political advertising and Olympics, there won't be much growth in U.S. ad spending. Coen predicts U.S. ad spending will rise 3% to $290.3 billion in 2007.
"The outlook for advertising this year is not very good," Coen wrote in his twice-yearly "Insider's Report," released Tuesday morning at Universal McCann's midyear update conference.
Big Four network TV ad revenue was down 6% in the first quarter after a 13% increase during the first quarter in 2006 and mostly flat performances in the final three quarters of 2007. Network TV ad revenue will rise about 3% to $17.2 billion in 2007, Coen predicted. High network TV prices may not cause short-term spikes in demand.
"Not much, if any, major network ad revenue growth now appears likely for 2007," Coen said.
Cable, whose ad revenues rose 1% in the first quarter, will do better with a gain of about 4% year-to-year to $20.2 billion in 2007. Syndication and spot TV will be down slightly.
Magna Global senior vp industry analysis Brian Wieser said Tuesday that emerging media will grow 32% in 2007 to $11.6 billion and another 28% in 2008 to $15 billion from 2006's $8.7 billion. Paid search will jump 29% in 2007 and will exceed $11 billion in 2008.
Online video advertising was expected to grow 55% in 2007 to $365.5 million overall compared with $235 million in 2006. It will grow another 53% in 2008 to $560 million with increases in supply and demand, Wieser said. But it remains less than 1% of the total ad spend on television.
And social networking will rise 148% to $685 million in revenues in 2007 and grow 49% in 2008 to total $1 billion, behind only out-of-home and search as the top emerging media category.
Coen believes that things could turn upward in 2008 with a 5% increase over 2006's ad revenues in the U.S. to $305 billion. Non-U.S. ad spending could also increase 5.8% to $360 billion.
"The economy in the U.S. will be better in 2008, and there will be extra election and Olympic activities," Coen wrote. "Some of the forces that have held back advertising expansion in the U.S. should lessen."