Advertising Slump for TV to Continue

Article excerpt

LOS ANGELES - Robert J. Coen, director of forecasting at McCann-Erickson New York, predicts that the four-year slump in television advertising will continue this year and perhaps next year, too.

``The current slowdown in the advertising industry is no surprise, but in another year or two I believe that the U.S. advertising industry will return to outperforming most other industries,'' said Coen, who spoke at the annual meeting of the Television Bureau of Advertising, a New York-based organization that represents the advertising and marketing interests of the broadcast television industry.

Television has not experienced a year of robust advertising growth since 1984, when revenues grew 18.5 percent. Since then, growth has been held to single-digit increases that have barely kept pace with economic growth.

Last year, television advertising revenue, including broadcast and cable, grew 7.5 percent, to $26.9 billion, mostly on the strength of the Olympics. Growth will slow to 6 percent this year, Coen said, and will be 7 percent to 9 percent next year.

Coen blamed a traditional cycle in advertising spending for the sluggishness.

``It was inevitable that ad budgets would undergo corrections after growing at nearly twice the rate of the total economy during the first half of the decade,'' he said. ``During those years, advertising grew at an exceptional rate due to new technologies, new industries and new mass marketers.''

In particular, he said, the introduction of products and services like the personal computer and overnight package delivery and the deregulation of the airline and telephone industries bolstered - then overextended - advertising budgets. As these businesses grew, typified by the success of companies like Apple Computer Inc. and the Federal Express Corp., so did their advertising costs.

To counteract rising expenditures, mass marketers searched for less expensive alternatives to television, including direct mail and telephone-book advertising. …

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