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Coen Projects 5-7% Global Ad Growth in '05

By Kathleen Sampey

NEW YORK - December 06, 2004 - Corporate profitability, a steady Gross Domestic Product and the fast-growing direct mail and Internet sectors will boost U.S. advertising spending 6.4 percent and global ad spending 5-7 percent in 2005, according to a presentation today at the UBS Media Week Conference.

Bob Coen, director of forecasting at Interpublic Group's Universal McCann, told investors and analysts who gathered at the Grand Hyatt here, "The year 2005 looks like it's going to be a very good year for the advertising industry."

He was joined by Steve King, the worldwide CEO of Publicis Groupe's ZenithOptimedia, who said that according to the agency's research, "The Internet will shortly overtake outdoor as a mass medium" and that the Asia Pacific region will see the largest increase in overall ad spending over the next three years.

With increases in direct mail, Internet and cable TV, Coen predicted that domestic media spending for 2005 will rise 6.4 percent to $280 billion.

Coen said 2004 has so far exceeded his expectations. Last year, he predicted a 6.9 percent increase in U.S. advertising for 2004, but year to date, domestic ad spending in traditional media is up 8.8 percent to $71 billion, in part, due to the summer Olympics and the presidential election.

When combined with nontraditional advertising such as direct mail, Yellow Pages, Internet and out-of-home, the combined national total is up nearly 9 percent to $165 billion.

Spending in local media markets actually lagged Coen's projection for 2004, and he doesn't foresee much of a change. He projected ad spending in local markets for 2004 to be up 6 percent, but it was up a mere 4.5 percent, with Yellow Pages showing a particular weakness. For 2005, Coen sees a 4.8 increase in local ad spending.

"Local advertisers have been pretty stingy with their money so the gains have been quite modest," Coen said. When factored in to the overall national spend in traditional and nontraditional media, Coen said 2004 U.S. ad spending is up 7.4 percent to $265 billion.

King said 2005 would have the best global advertising spending prospects since 2000 with a global rise in spending of about 5 percent and closer to 6 percent in both 2006 and 2007. So far, 2004 global ad spending has peaked at nearly 7 percent to $370 billion, he said.

He predicted that at current rates of ad spending growth, "Asia will eclipse Europe within 10 years."

Mail Volumes Hit By UK Bank Reductions

A major reduction in direct marketing spend by the UK’s banks has impacted on direct mail volume and expenditure, according to figures just released by the Direct Mail Information Service.

Elsewhere the picture is largely encouraging with government mailings increasing by 36.2% and volume from the health sector up 26.7%. Charities also increased their use of the medium with volumes up from 75.4 million items to 84.2 million – a rise of 11.7%. Car companies and dealerships sent 13.41 million items, up 11.5% year on year.

Official statistics for the January to March 2005 period show that UK banks reduced their mailing volumes by 40% compared to the same period in 2004 – down from 153 million items to 91.8 million.

Overall, total volume for the first quarter was down 7.8% year on year at 1.36 billion items. Total expenditure fell by 7.2% to £259.65m.

The reduction in volume by banks goes against the overall first quarter trend in the financial services sector, with mailings from building societies, insurance companies and other financial institutions all on the increase.

A major reduction in direct marketing spend by the UK’s banks has impacted on direct mail volume and expenditure, according to figures just released by the Direct Mail Information Service.

Further analysis of the figures shows that when examined over a twelve month period, the decrease for volume reduces to 3.4% and expenditure to 3%.

Commenting on the figures, DMIS Managing Director, Jo Howard-Brown, says: “The extent of the cutback by the banks, while against the first quarter trend in the financial sector, fits in with what the industry has been telling us. There is a general retrenchment going on and no-one is quite sure how temporary or otherwise it may be. Relatively new users of the medium, such as health companies and the government, are, however, significantly increasing spend and this has to be encouraging for the future.”

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