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Universal McCann predicts US adspend to rise by 5%

LONDON - Universal McCann is expecting US advertising expenditure to rise by 5.2% to $285.1bn (£145bn) by the end of the year, with the overseas adspend to climb by 5.5% to $314.4bn, according to figures from the company's annual advertising expenditure report.

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Figures for US adspend in 2006 do not match Universal McCann's initial predictions of a 5.8% rise. Universal McCann said: "It is now quite clear that ad growth in 2006 will be below what we expected a year ago."

Universal McCann predicted in December 2005 that there would be extra spending in the US market because of the the Winter Olympics and the US mid-term elections, which would both create a knock-on demand for TV commercials.

Overseas adspend growth was also overestimated for 2006, with the report saying: "Last December, the indicators pointed to a continuous recovery in most overseas economies, and we forecast growth of 6.2% for overseas ad spending in 2006.

"Based on the latest reports, we now expect a gain of only 5.5%. Combined worldwide advertising is now expected to post a gain of 5.3% in 2006. The ad growth rate improved in 2006, but not as much as we had expected."

The report went on to state that the absence of the Olympics and major political contests in 2007 would lead to a moderation in US adspend. Additionally, Universal McCann said: "There is considerable concern about economic softening as energy prices bounce up and down."

Universal McCann said it forecasted worldwide adspend growth in 2007 of 5.3%, based on no change in exchange rates.

The report concluded: "The advertising industry is currently undergoing many changes and transitions and a high level of uncertainty about what lies ahead. Worldwide advertising will probably grow at a pace closely related to global economic growth in 2007."

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