June 29, 2006

Ad outlook not quite so rosy for ’06

By Paul J. Gough

NEW YORK (Hollywood Reporter) - One of Madison Avenue's
best-known analysts has cut his prediction for 2006 ad
spending, delivering a still upbeat but slightly muted

Universal McCann senior vp Robert J. Coen said in a report
Wednesday that advertising in the U.S. should increase 5.6
percent in 2006 compared with a year earlier. That's down
slightly from the 5.8 percent Coen forecast in December, and
puts Universal McCann's predictions in line with other big-name
analysts who have cut their expectations slightly over the past
few weeks.

Coen said there were a number of factors in his decision to
downgrade the forecast, including an overall correction in
spending among marketers as well as a decline in auto and
pharmaceutical spending, two strong categories that fueled the
growth from the mid-1990s onward.

There were a handful of positives in the first quarter,
including a torrid pace of spending in TV with the Winter
Olympics and early political advertising providing a major
boost. Big Four ad revenue was up 13 percent in the first
quarter compared with 2005. It is likely to lessen but remain
up 6.5 percent for the full year, Universal McCann said.

Spot revenue, fueled by political advertising that is only
going to get stronger near the end of the summer and into the
fall, could increase even more than the 8.5 percent Universal
McCann predicted. Cable and syndicated TV also will increase in
the mid-single digits, while national radio will increase only
1 percent. Local radio ad spending, the bulk of expenditures in
the radio sector, will be flat.

At a Bear Stearns conference on the future of radio held
Wednesday in New York, another ad executive suggested that
television might be loosening its hold on the ad market.

Carat Americas CEO David Verklin said that TV is
"vulnerable for the first time in 30 years" and is in danger of
losing money to online and radio.

Reuters/Hollywood Reporter