Domestic advertising spending growth is expected to slow to a 14-year low of 6.1 percent in 1989 and trail overall economic growth for the first time since 1975, a prominent advertising forecaster predicts.
"It will be a rather mediocre year," said Robert J. Coen, senior vice president and director of forecasting for the advertising agency McCann-Erickson.He warned that the underlying sluggish trend could "even become worse if the economy falters and drifts into a recession."
The overall 6.1 percent growth to $125.6 billion in 1989 would be down from the 7.9 percent rise Coen expects this year and it would be the slowest growth since a 4.8 percent rate of increase in 1975.
A decline in ad spending growth is typical in the year after the Olympics and a presidential election, both of which are believed to attract new money into advertising.
In post-Olympic years, the dropoff in national ad spending has sometimes been cushioned by local ad growth. But growth in the local category is also expected to suffer this time around, Coen said.
Coen said he expects national ad spending will rise 6.5 percent next year, while local spending will be up 5.6 percent. National ad spending rose an estimated 8.9 percent this year, while local ad spending rose about 6.7 percent.
He said 1989 will also be the first time since 1975 that ad spending failed to exceed the expected growth in the economy. He said the consensus estimate among economists is for 6.8 percent growth in the gross national product next year, down from 7.2 percent this year. The figures on economic growth are not adjusted for inflation.