Internet, Mail top '07 ad channels: Universal McCann report

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Direct mail is to grow 7.5 percent to $64.4 billion and Internet advertising 15 percent to $10.7 billion, according to a 2007 forecast by Universal McCann.

The agency projects that total national advertising budgets next year will jump 5.9 percent to $195.6 billion, exceeding the country's nominal GDP in growth. All other media, including television, radio, magazines, newspapers and yellow pages, will perform lower than Internet marketing and direct mail.

"Traditional advertising has been sharply curtailed, and the only major traditional medium showing strong growth has been direct mail, which is probably the only medium to clearly provide short-term accountability measures," said Robert J. Coen, senior vice president and director of forecasting at Universal McCann, New York.

The remarks and figures appeared in Mr. Coen's Insider's Report for Universal McCann clients. Click here for a chart of the figures. Universal McCann is the global media services unit of Interpublic Group of Companies Inc.'s McCann Worldgroup.

Delayed spending by large national marketers should help budgets finally edge up in 2007, Mr. Coen said. But he had words of caution.

"The demand for advertising by the presently beleaguered local marketers is not likely to improve much in 2007 unless the economy turns out to be much better than presently expected," he said.

The report said advertising's role in the U.S. economy has slid since 2000, when its share of the sales process was over-expanded.

"In recent years, marketers have exerted extreme pressure on all parts of their marketing budgets, and they have intensified their efforts to try to get some accountability or ROI evidence for all outlays," Mr. Coen said.

An expansive economy is not expected in 2007, the report said. This year benefited from the Winter Olympics and political spending. But most marketers are in good financial condition, the report said, with their stock prices above their 2000 highs.

"Budget reductions for traditional advertising aimed at long-term efforts to maintain and build favorable consumer attitudes towards brands could begin to reappear in 2007," Mr. Coen said. "Better-than-might-be-expected ad growth could begin in 2007, but it most likely will be delayed until 2008."

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