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Ad Revenue Growth Exceeded Expectations This Year

December 6, 1994

NEW YORK (AP) _ Domestic advertising grew beyond expectations this year and advertisers probably will boost spending at a relatively strong pace again in 1995, media industry forecasters said Monday.

But the news is not all good. Newspapers and magazine publishers face rising paper costs. Television networks may have to give away commercial time to advertisers promised bigger audiences than they got for some programs.

Securities analysts got those reports from media executives at the start of the annual PaineWebber media conference, which continues through Friday.

Robert Coen, a McCann-Erickson Worldwide executive and the industry’s best- known forecaster, said ad spending grew 7.9 percent to $149 billion this year, the fastest rise since it grew at that pace in 1985.

He said broadcasting advertising was stronger than expected, getting a lift from the Winter Olympics and the congressional elections. Other advertisers still hurting from the recession took a year longer than he expected to resume old spending patterns, Coen said.

″It is pretty evident that the advertising recovery has come into place in 1994,″ he told the group. Spending by national advertisers rose 8.4 percent while spending by local advertisers rose 7.2 percent.

He said ad spending is poised to grow faster than the economy for at least a decade.

For 1995, Coen estimated a 6.8 percent growth in ad spending for $159 billion. He cited economic growth and growing demand for advertising in key industries like automobiles, restaurants and medicines.

He wasn’t the only ad optimist.

John Perriss, chairman of Zenith Media Worldwide, said the outlook worldwide was the most bullish for his firm since 1988. Perriss said U.S. ad spending would be up 4.2 percent this year. His 1995 forecast is for 4.7 percent growth.

Newspapers can expect revenue growth of 3 percent from circulation and 7 percent from advertising in 1995, said Jerry Tilis, vice president for marketing at Knight-Ridder Inc.

But he said publishers will have to absorb newsprint price increases in the 20 percent range by being more efficient and aggressive about selling newspapers and getting advertising.

Twig MacArthur, a top newsprint executive at Champion International, said his company raised prices three times this year and plans another hike in March because of strong demand. The industry slashed prices and closed mills over the past few years and he said the increases leave prices below recent averages.

David Poltrack, the top research executive at CBS Inc., said network television advertising will be up 8.4 percent in 1994 and 5.5 percent in 1995.

He said the slower pace for 1995 partly reflects the absence of post-season baseball, which usually attracts large male audiences and the need to give time to advertisers for shows that drew smaller audiences than guaranteed.

Poltrack estimated the networks are running 4 percent behind on audience guarantees last summer when advertisers made commitments to certain programs.

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