Despite ad spend slowdown, PR spend outlook strong

NEW YORK: Interpublic's Magna Global unit downgraded its outlook for US ad spending this year to 2.9% from an initial forecast of 3.1%.

NEW YORK: Interpublic's Magna Global unit downgraded its outlook for US ad spending this year to 2.9% from an initial forecast of 3.1%.

Magna Global now expects US ad spending to reach roughly $173.1 billion in 2011 (excluding political and Olympic advertising).

Alex Feldman, manager of global forecasting for Magna Global, attributed the downgrade to slowing growth in the manufacturing sector, as well as disappointing retail sales.

Magna Global does not include PR spend in its forecast. However, other reports forecast strong growth for PR spend. Private equity firm Veronis Suhler Stevenson, for instance, expects PR spending to enjoy an annualized growth rate of 5.6% over the next four years.

“Over the last several years, companies have moved more money into marketing services [like PR] rather than into pure advertising,” Feldman said.

He told PRWeek that advertising “always has the problem” of measurement, and cited the often-referenced quote: “Half of the money I spend on advertising is wasted, and the trouble is I don't know which half.” The saying is attributed to Unilever founder Lord William Leverhulme.

Feldman said ad spend is particularly weak among local businesses, as reflected by a slowdown in local mass media, including newspapers, radio, and outdoor advertising. Local media is only expected to grow  by 0.5% this year. “I think that's a product of the uneven economic recovery,” he said.

However, national advertisers are performing better, which is why Magna increased its forecast for network and cable TV ad spending to 7.9% for 2011, up from its previous estimate of 6.5%.

For 2012, Magna expects overall ad spend to grow by 3.4%, led by national mass media (5.2% growth, excluding Olympic advertising), followed by local mass media (2.3% growth, excluding political advertising) and direct media (2.4% growth), which includes directories, direct mail and paid search.

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