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Ad prospects only slightly better in 1992: newspaper industry forecasters make their projections.

Ad prospects only slightly better in 1992

Newspaper industry forecasters make their projections

A year ago Robert Coen predicted that U.S. advertising spending would grow 4.6% last year. Now he says 1991 ad spending will shrink 1.5%--the first decline in 20 years and the worst drop since World War II.

"It was a disastrous year," the vice president and forcasting director at ad agency McCann-Erickson told investment analysts at the 19th PaineWebber media conference in New York.

He blamed the Persian Gulf war and a longer and stronger recession for skewing his prognostication.

Total ad spending would slip to $126.7 billion last year when all the tallying is done, he said.

The way the American Paper Institute figured it, factoring in inflation of about 4.5%, actual 1991 ad spending will decline 6%.

For what it is worth, Coen weighed in with an equally optimistic prediction for 1992: 6.2% higher ad spending, with the help of pump priming from the Olympics and presidential election.

Coen, who confessed he was "too optimistic" about last year, admitted to the naturally skeptical analysts that he was the most optimistic person in the room.

Conceding that the outlook for this year remained clouded by uncertainties about the economy, he anticipated no strong upturn until the second half.

Coen's assumptions for 1992 were based on real growth of 2.4% and nominal gross national product growth of 6%.

Local ad spending in newspapers will jump 6.5% this year, to $28.4 billion, he said, the biggest increase of any medium.

If papers regain just half of the linage they have lost, revenues would jump in double digit gains, he reasons.

Average local advertising--including newspaper, local broadcasting, and yellow pages--will rise 5.8% this year, he said.

National advertising--including direct mail, broadcasting, and print--will rise 6.6%, Coen said.

Last year, he said, newspapers neither gained nor lost national advertising, but local advertisers spent 6% less in newspapers--the biggest decline of any medium.

Newspapers remained the largest local advertising medium by far last year, when the only medium to gain local ad spending was yellow pages, up 3%.

Among top products, the only category to spend more last year in television and magazines, perhaps not coincidentally, was drugs and remedies, up 7%. Among secondary products, only beer spent more in 1991, 17% more.

John Perriss, chairman and chief executive officer of Zenith Media Worldwide, a division of Saatchi & Saatchi Co. PLC., predicted 1992 would remain "fairly grim" for advertising.

"We don't see 1992 as a bounceback year," he said.

He predicted that ad spending would decline 2.2% in real terms, or after inflation, and no prospect of a return to real ad growth--ahead of inflation--until 1994.

Jerry Tilis, vice president of marketing for Knight-Ridder Inc., figured total newspaper ad revenue declined 7% to 8% last year, with classified, the most profitable category, down 13% to 14% in revenue.

He blamed the bulk of the declines on cyclical, as opposed to secular, or permanent, changes. Troubling secular changes, he said, were the success of the discount retail stores, which advertise relatively little, and the growth of competing media such as direct mail. On the bright side, he expected that preprint volume would show an increase last year.

His outlook for the economic recovery was for a slower rebound this year than after any of the three previous recessions. Tilis anticipated real gross national product to rise 2.5% to 3%, unemployment at 6.5% to 7%, and inflation at 3% to 4%.

He predicted that total newspaper ad revenue would inch up 1% to 2% this year on lower volume. All categories except part-run will show volume declines, he said, and actual yields will rise 4% due to price increases.
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Title Annotation:Robert Coen, John Perriss, Jerry Tilis
Author:Garneau, George
Publication:Editor & Publisher
Date:Jan 4, 1992
Words:631
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