Carat slashes forecast for US ad spend growth in 2005

MUMBAI: With rising oil prices, the dollar downslide and the US current account deficit being potential causes for concern in 2005, media buyer Carat, a unit of UK-based Aegis has sliced its 2005 global advertising spend forecast.

The growth predictions cited for 2005 by Carat has dipped from 4.8 per cent in September to 4.5 per cent in 2005 and the global ad spending to increase by 4.9 percent, compared with the five per cent increase its forecast stated in September.



The agency has said that despite the fact that the world was experiencing a significant recovery in advertising spending and a continued belief of advertising budgets being on the rise in the US, this action was necessary. This move has simply reiterated the concern marketing executives bear today with the recent economic health of the US.


Interestingly, Carat cut its US ad spends forecast to 4.5 from 4.8 per cent although it has increased UK's projected growth to 4.6 per cent from 4.3 per cent due to increased British marketing budgets.

According to agency reports, UK marketing budgets have been revised in the third quarter for the fourth consecutive quarter and this has led Aegis to forecast growth of 6.4 per cent in 2004, compared with previous expectations of 4.6 per cent.

The US advertising sector space although has witnessed the economic scenario heading towards the slowing of growth and fewer job gains. Also, US corporate profits have seen a slight slump in the third quarter which has led to the decline in consumer confidence in the last quarter of 2004.

Another factor in consideration are quadrennial events like the Olympics and the US elections which surged spending by about 6 per cent. 2005 is expected to record a drop in spends across most markets.

ZenithOptimedia and Universal McCann as recently as last month have on the other hand raised their figures of ad spends forecasts this year.



2004 saw Carat in Europe exceed the expected growth levels from 4.4 per cent to 4.8 per cent. It put growth in the UK at 6.4 per cent, up from 4.6 per cent.

Carat has although maintained its 2005 forecast for Europe at 4.4 per cent. But raised its forecasts for Spain from 4.2 per cent to 4.5 per cent and for France from 1.9 per cent to 2.2 per cent.

Coming to the Asia-Pacific region, advertising spends here are expected to grow by 5.8 per cent compared with 6.2 per cent in 2004. Another pint in note being that advertisers are beginning to respond to the fragmentation of television audiences by allocating more funds to the Internet and in non-traditional media.



Carat forecast Internet advertising spend to go up by 20 per cent in 2005 which currently stands at three per cent. The outdoor market was another area pointed out by the agency that would be a strong medium in the years to come which will then evolve to the growth of in-store digital delivery.

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