DM Strong In Time Of Weak Ad Growth: UniversalMcCann’s Coen

While the overall advertising market was weak in 2006, and should remain so in 2007, direct marketing showed strength as marketers turned to online and other forms of measurable advertising, according to UniversalMcCann’s senior VP and director of forecasting Robert J. Coen.

Last year’s weak performance — a 3.9% growth rate, compared with an anticipated 5.2% — was doubly disturbing in light of gains usually seen during Olympic and U.S. election years.

For 2007, Coen had originally forecast a U.S. advertising growth rate of 4.8%, a figure he has lowered to 3.1%. He attributed the cutbacks to big business slashing expenses and focusing on improved productivity and profit growth and building up cash. At the newly revised rate, U.S. advertising spending should amount to $290.3 billion for the year.

But direct and online marketing will be bright spots amid this tepid forecast. Direct marketing spending on national network television for the first quarter of 2007 is running at an 18% increase above first-quarter 2006’s level. Spot TV levels are up 7%, and magazine spending is up 8%.

First-quarter 20007’s Internet advertising spending was up 16.7% above last year’s level, and direct mail spending was 4.5% higher.

Coen cautioned that direct mail activity may be beginning to plateau. Postal rates went up in 2006, and are scheduled to go up again this year. According to Coen, response rates are slipping and, with the exception of a blip of political mailing in fourth-quarter 2007, spending growth in direct mail should be more modest than in years past.