Ad Spending Leveling Off, Industry Told

NEW YORK —  With cutbacks in the troubled computer and telephone fields expected to slow the growth of advertising spending this year, Madison Avenue executives met at the 28th annual Advertising Age Creative conference to face the challenge.

“Economic instability in the marketplace, expanding consumer sophistication and competitive challenges mean that advertising and marketing are undergoing major changes . . . that stand to alter the complexion of the entire industry,” the meeting organizer declared in an advance statement to those who attended the conference, in New York.

Robert Coen, senior vice president and director of forecasting for the McCann-Erickson advertising agency, forecast that domestic ad spending in 1985 will increase only 9.1%, down from Coen’s December projection of a 9.7% increase.

Chillier Climate

While Coen predicted some $95 billion will be spent on advertising overall this year, he said weaker than expected economic performance and a “flattening out” of spending by computer companies and utilities will contribute to a chillier advertising climate.

The forecast certainly doesn’t warm the hearts of the 1,000 advertising executives expected to attend the three days of workshops, sponsored by the New York-based Advertising Age trade magazine. Held annually, the conference is attended by many of the nation’s top advertising executives, who will discuss new marketing and advertising techniques and trends.

But on Sunday they learned from keynote speaker Brian G. Dyson, president of Coca-Cola USA, how to avoid the kind of marketing gaffe that forced Coke to resurrect its controversial 99-year-old soft drink as Coca-Cola Classic.

In a 45-minute speech to conference goers, Dyson conceded that the marketing move “has been a strain” on the company but added--tongue in cheek--that sometimes it pays “to do something smart and imaginative or controversial and notorious.”

Madison Avenue had been in an upbeat mood for much of the last three years as heavy consumer spending pulled the nation out of a crippling recession.

Rapid growth in consumers’ personal incomes and greater use of credit were largely responsible for the surge in spending, but economic forecasters predict that may change, although there are as yet no signs that overall consumer spending is abating.

Symbolically, the cutbacks in the computer and telephone industries are among the most disturbing trends to face the advertising industry since the 1970s when, according to author William Meyers, recession-weary consumers failed to respond to Madison Avenue’s marketing touch.

“The sudden disappearance of Ad Alley’s consumer clout during the early 1970s shocked and alarmed advertisers across the country,” wrote Meyers in a recently published book on the advertising industry, “The Image-Makers.” That was the decade, Meyers wrote, that the economy and changing life styles prompted consumers to grow more skeptical and tight-fisted.

Forecaster Coen believes that growth in the banking and financial services industry may ultimately compensate for the slowdown in high tech.

But for now, conference organizers said in their brochure, the push is on to “think smarter” by trying to “revitalize old-line companies.”

Ironically, it was the high-technology industries that, in part, helped rejuvenate the advertising industry--both creatively and financially--after it suffered a loss of confidence in the 1970s.

But the two industries have since fallen on hard times themselves.

American Telephone & Telegraph last week announced that it was laying off 24,000 of its employees. Apple Computer, Intel Corp. and National Semiconductor have all slashed their advertising budgets, forcing high-tech advertising and public relations firms to lay off 5,000 workers since the beginning of the year, according to Adweek, a trade magazine.

Apple, whose meteoric rise in sales has been attributed to its clever but expensive advertising campaign, plans to cut its ad budget by 30% to $50 million, industry sources say.