ADVEWRTISING & MARKETING / BERNICE HARRISON: The last year wasn't as bad as doomsayers had predicted - but it was sobering.

For the advertising industry 2002 has been characterised by job layoffs, reduced budgets, fierce media competition, few account moves and nervous clients.

The more optimistic in the industry point out that it wasn't as bad as the post-September 11th doomsayers had predicted - but it certainly was sobering.

Predicting what will happen in any industry is difficult but it's even more so in the volatile world of advertising.

Two of the industry's more straight talking figures here give their best predictions on how 2003 will look, while the head of the advertisers' representative body give his view from the client side.

Peter Davies, managing director, McCann-Erickson

Like most years, there will be good news and bad in 2003.

The bad news first.

A couple of agencies will go to the wall. These days, if you don't have proper strategic planning, and really good creative folks, you're in trouble. And buying them in, if you haven't got decent income, is more than you can afford.

So that wall beckons.

Large amounts of taxpayer money will continue to be wasted on invisible and ineffective public service advertising produced by a tendering and review process guaranteed to deliver a public disservice.

Luckily, there's good news.

Agencies will get better. For quite a while now, McConnells, Irish International, McCann Erickson, Youngs, Owens, Chemistry and Cawley Nea have been doing the good stuff, and all the signs are that they will keep right on doing it.

I tip my hat to all of them. And after upgrades and investments this year, I would expect to see QMP, Leo Burnett, DDFH&B and Ogilvy all raising their game.

Clients are getting smarter. There are still some who are demanding rubbish from their agencies, paying peanuts, and feeling pretty smart. They're not.

But there are more and more genuinely smart ones out there who have figured out that creativity is the most cost-effective and positive way to get competitive advantage.

They realise that creative gets results with a smile, and lasting affection.

For advertising agencies, the growing numbers of those clients is the best news of all for 2003.

Michael Caraher, chief executive officer, Association of Advertisers

The SSIA savings schemes took money out of circulation and the euro changeover made people feel that things cost more and certainly had an effect on discretionary income which impacted greatly on advertisers of soft drinks, confectionery, wine - basically anything that's an impulse buy.

Overall, I think advertising and marketing spend will keep pace with inflation but that will be all. With so little growth in the economy there's going to be little expenditure on capital expenditure because it's simply too hard to justify.

So I don't expect to see too much big brand investment. 2002 saw a new and very determined mood of value for money among advertisers and that's going to continue to be a key consideration when it comes to budgets. Integrated, cross media campaigns are going to continue to be important strategically.

There is an ever growing interest in sponsorship and I know of several advertisers out there looking for the right event particularly in the sport and music areas. Overall, media spend was up by 1 to 2 per cent this year and that's the sort of growth I can see happening next year.

Advertisers will be keeping a keen eye on what the new Broadcasting Authority comes up with in terms of media inflation or regulatory changes.

Richard Law, managing director, MediaVest Ireland

Advertisers will spend about the same next year and the market will become even more competitive. Media owners will find the prospect of media deflation a bitter pill to swallow but will learn to accept revenue protection as a goal rather than revenue increase.

Consolidation will continue on both the media owner and ad agency sides and competition will get fiercer. Most alignments are in place, so only the names will change.

RTÉ's licence fee increase will somehow not be enough. TV3 may suffer, as RTÉ acts tough to sort out its 2002 trading imbalance.

If they do not take the trading imbalance out of the market early on by possibly giving refunds to clients who have not got the coverage they paid for, then the station's inability to deliver what they promise in deals will become intolerable.

TV spends up North will continue to defy logic.

The JNRR in August will include UK titles for the first time and will show that all the copies sold here are actually read by people too.

New press entrants Associated Newspapers and News International will take ad spends from the Independent titles, Sunday World and the Star.

Radio stations will continue to find a fantastic performance from the JNLR when overall listening remains fairly static again.

Listeners still await decent radio ads.

Outdoor will have a slow year with no election, referenda, World Cup or relaunching Telecoms to push up demand and prices. Poster contractors will talk up the Special Olympics.

Cinema will take more money despite much of the audience still being in the foyer when the ads run.