NEW YORK: US adspend growth in 2006 is set to shrink from 5.1% to 4.7%; while in 2007 it will contract from 3.5% to 2.8%. So divines no less an oracle than Lauren Rich Fine - first vice president and managing director of corporate strategy and research at Merrill Lynch's Equity Research Department.
Fine, who intuits biannually on adspend trends for the year ahead, usually needs to revise her prognostications - in common with most of her peers. After all, crystal-ball gazing is not an exact science; nor does the world stand still.
Moreover, most folk don't perceive a downward revision from 3.5% to 2.8% to be all that much . . . just 0.7 percentage points.
But line managers in the media and advertising companies tracked by Fine and the entrail-gazing brigade would be out on their necks if they worked to similar margins of error - a revision of forecast for 2007 that equates to 20%.
Which is not to criticize the prophetess and her peers. Rather the use of such inconstant data by those in Wall Street and elsewhere who juggle vast sums of other people's money.
In a circular to investors issued last week, Fine noted that the rate of advertising growth now lags the overall US inflation rate, which "supports our belief that media no longer enjoy the benefit of above average rate inflation, rather the opposite where increased competition and measurement is putting pressure on rates."
However, she stuck by her earlier estimates for broadcast TV, forecasting 5.5% growth in 2006 and a slippage of 1.2% in 2007. Cable network growth for 2006 was also confirmed at 6%, although she downgraded her prediction for 2007 from 7.5% to 6%.
Fine also noted that cable had a "lackluster" upfront, opining that scatter "seems to be stronger now" for both cable and broadcast.
Magazines were unchanged at +2.5% for this year, although growth was halved for 2007 from 2% to 1%.
And, according to Fine, radio growth will freefall in 2006 from her previous prognostication of +1.9% to zero. In 2007 her growth forecast is down from 2.2% to just 1%.
As ever, the internet bucks the trend with turbocharged growth projected at nearly 30% this year and 22% next.
Data sourced from AdWeek (USA); additional content by WARC staff
