Agencies' Forecasts of Hard Year May Have Been Too Optimistic
Last fall, when ad agencies looked toward 1991, they saw a difficult year plagued by soft ad spending. They may have been too optimistic.</br></br>In recent weeks, several major agencies have had to lower their 1991 U.S. projections as clients, spooked by the war and the recession, pull in the spending reins even tighter. A quick end to the war could change the outlook again. But for now, some agencies that had expected modest U.S. spending gains say they will be lucky to have a flat year.</br></br>Such pessimism is jarring in this professionally optimistic business -- all the more so because agencies virtually never abandon their spending forecasts so early in the year.</br></br>D'Arcy Masius Benton & Bowles, for one, had expected a 4% to 5% increase in 1991 U.S. spending. But since the Persian Gulf war broke out, it has shaved that to "flat to slightly declining," says Roy Bostock, chairman and chief executive officer. "It started with the softening economy," he says. "Then confidence took a terrible jolt with the war."</br></br>Similarly, Saatchi & Saatchi's Backer Spielvogel Bates unit last fall was shooting for a 10% revenue increase. But even before the war broke out, it downgraded its expectations to a flat year, says Carl Spielvogel, chairman and chief executive officer. Omnicom Group's BBDO had "expected a modest increase" in U.S. spending when it planned its 1991 budget in December, says Allen Rosenshine, chairman and chief executive. "But our thinking is changing very rapidly. We're beginning to experience the cuts already. Whether or not those cuts will be reinstated later in the year is a crapshoot."