Direct Mail to Overhaul Traditional Ad Media: Merrill Lynch

04 September 2001

Stockbroker Merrill Lynch is in full jeremiad throat with its latest forecast for America’s advertising industry, predicting a fall of 4% in this year’s aggregated adspend, offset by a paltry 1% rise in 2002.

However, onlookers point out that the Thundering Herd’s latest entrail-raking exercise is spectacularly at odds with its own prognostication only two months ago that adspend would slip by just 0.7% in 2001 with a vigorous resurgence of 5.1% in 2002.

However, for those who take the art of guesstimatology seriously, Merrill’s base for its current forecast is the spate of ad industry layoffs and the slippage in consumer confidence. This leads it to speculate that non-traditional advertising techniques – direct mail and sales promotion – will outstrip orthodox media such as TV, newspapers and magazines.

Conjuring figures from wherever, Merrill says that total spend on all forms of advertising (including non-traditional), will fall more gently to 2.6% this year then increase by 1.7% in 2002.

But newspaper ad revenues will be down 5.9% this year (compared with the seer’s June forecast of 2.9%) , rising just 2.2% in 2002 - versus its earlier prediction of 3.9%. Television faces an equally austere period, declining 3.5% this year and plunging by 4% in 2002.

Adspend in magazines will sag by 7%-8% but regain 2% next year. This divination compares with Merrill’s earlier estimate of 4% decline in 2001 followed by a 4% gain next year.

[Some cynics opine that the only constructive outcome to the spate of contradictory clairvoyance is to accelerate the selling and subsequent buying of stock in advertising and media companies. But who on earth would benefit from that?]

News source: Wall Street Journal