Forecasts are bright for Madison Avenue in 1987
The gloom that pervaded Madison Avenue's advertising world for much of this year is fading. In the seasonal pause as the year ends, there has been a flurry of cheering reports of an upswing in advertising time and space sales in the fourth quarter. That has been echoed in recent days by reports of a last-minute rush of Christmas sales at the retail level.
The first of the year-end summaries now coming in shows a strong demand for advertising space - reaching well into the new year - in magazines and for commercial time on network television. This, in turn, is fueling hopes for a better 1987 for the advertising industry.
In addition to the ad spending rush which has been showing up in recent weeks - in scatter television spot buys, for example - industry analysts base their predictions for a brighter 1987 on a number of factors.
One is that year-end sales of advertising slots have been so brisk that bidding has been keenly competitive for the little inventory that remains for the first quarter of 1987. This tends to push prices up, much the same as it would in a commodities market.
Some analysts base their visions of bigger advertising spending in the new year on the recently enacted tax reform legislation. They point out that these revisions could put dollars back in the pockets of consumers. And, they argue, these added dollars could prove to be an irresistible lure for advertisers who will increase their advertising budgets accordingly.
Some see a spate of new product launches - particularly in package goods, soft drinks, computers, business, and financial services - substantially increasing advertising spending in the coming year. Still others believe domestic advertisers will have to increase spending to defend market share from an influx of imports.
Whatever the reason, Madison Avenue's bears seem to be lumbering off into the distance with hardly a mutter as 1986 comes to a close while the bulls are gleefully bellowing to be heard.
Advertising agencies are reporting a decided shift in the attitude of their clients. A defensive, cost-cutting posture is now giving way to a more offensive approach.
``Clients frequently are saying these days, `Let's use ad dollars to go after sales and improve our profits,''' says David C. Lehmkuhl, senior vice-president and group media director of N.W. Ayer, a major New York agency.
Mr. Lehmkuhl reports he's now hearing far less from the doomsayers who for the last two years were muttering that the good times in this country are over and the economy is about to crash. He believes that most advertisers are going into 1987 with some optimism.
He singles out the business ``books'' such as Forbes, Fortune, Business Week, and Inc. to support his argument. Advertising pages are up substantially in the fourth quarter in these publications, according to his count, he says, and ``you can count on advertising in business magazines to lead other advertising - up or down - by three to six months.''
Robert J. Coen, McCann-Erickson's director of forecasting, is only a little less optimistic. He points out that overall advertising expenditures posted a 7.7 percent gain in 1986 to top the $102 billion mark. Advertising in all media will outpace gross national product growth for the 11th consecutive year, he says. But this is due largely to ``selective gains'' in special media such as cable television and direct mail, where growth has been substantial.
``You could call me guardedly optimistic,'' Mr. Coen told the Monitor as he predicted the same rate of growth for advertising in the United States for 1987.
At Bozell, Jacobs, optimism is unbridled. Mike Drexler, the agency's executive vice-president and national media director, foresees the momentum that has been building up steam in the current quarter carrying advertising well into 1987.
``We see advertising gaining strength throughout 1987,'' says Mr. Drexler, ``with 1988 turning out to be an exceptionally good year.'' Although advertising expenditures have been outdistancing the rest of the economy, Mr. Drexler believes that, as the economy picks up next year, it will boost advertising even more.
But advertisers want to break out of the clutter mold, Drexler warns, and they're not willing to spend blindly. They want innovation, more effectiveness, and more impact for their advertising dollars, he says. He points to the recent purchase of the ad space in an entire January issue of Fortune by Merrill Lynch. That clearly expresses confident expectations for the new year.