Ad Growth May Speed Up in '94: After Modest Gains in 1993, Ad Forecasters and Newspaper Execs Are Predicting Larger Increases in Ad Spending This Year

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AFTER MODEST GAINS last year, advertising forecasters and newspaper company executives predicted larger, but still not booming, gains in ad spending in 1994.

While hoping that fourth quarter 1993 momentum would build this year -- and put a stake in the heart of a four-year slump from which the industry fitfully has been trying to escape, newspaper companies took nothing regarding the economy for granted. They were budgeting conservatively, assuming little if any economic improvement.

U.S. advertising fell short of most forecasts in 1993, but its approximate 5.2% growth exceeded inflation.

Improving economic trends late in the year contributed to greater optimism about 1994 among advertising and newspaper executives who addressed a crowd of financial analysts at the annual PaineWebber Media Conference in New York in December.

Robert Coen, senior vice president and forecaster at the New York ad firm McCann-Erickson, predicted that total U.S. ad spending would grow 6.3% this year to $146.8 billion, thanks to help from an improving economy, the Winter Olympics and added political advertising.

"The media marketplace seems to be firming up," he said.

Assuming that the U.S. economy expands at the same 2.8% pace as last year, Coen predicted that spending on local newspaper advertising would increase 6.5% this year to $30.1 billion. That compares with a 4.2% gain in 1993 -- the first time in five years that newspaper ad growth outpaced inflation, which was rated about 2.9% last year.

"The U.S. advertising outlook for 1994 is clearly brighter than it has been for years," he said. The restructuring that has delayed the ad rebound typical after recessions "appears to have been completed, and the longawaited post-recession boom... could be about ready to appear."

Coen said historical trends pointed to even larger 1994 gains, but he forecast conservatively because recent trends "have been noticeably different from those of the past, and caution suggests that instead of a boom next year, we should more realistically look for moderately better results?"

Ad spending in 1993 fell short of his prediction of a 6.9% gain, he said, because the economy failed to perform as expected. Similarly, his year-ago forecast that local newspaper ad spending would rise 8%, ahead of all other media, significantly overshot the 4.2% pace.

National advertising, after a 5.6% gain in 1993, will increase 6.5% this year to $85.5 billion, according to Coen's forecast, and spending by national advertisers on print will grow 5.8%, slower than all other media categories.

Local advertising -- newspaper, broadcast and Yellow Pages -- will accelerate to 6.1% this year, after a 4.6% increase in 19%, Coen forecast. Radio is expected to lead in local ad growth with 9% and Yellow Pages to trail at 2%.

Newspapers in many markets will see substantial gains, and some could see real booms, he said. …