NewsLine Column: A Fascinating Year For UK Media?
2002 was an undoubtedly turbulent year for UK media, with the collapse of ITV Digital, the publication of the Communications Bill and news of Carlton and Granada’s impending merger set against the backdrop of the ongoing advertising downturn. With 2003 still in its infancy, James Papworth, ad marketing manager at IPC Prospector, looks back over the past 12 months and gazes into his crystal ball to predict that 2003 has all the makings of a fascinating year…
We’ve all heard the urban myth of the City analysts versus the dart player. The City boys pick a share portfolio based on market share, capitalisation and profit targets. The dart player picks on random numbers thrown at a board. A year later the dart player is off to the Maldives while the City boys are handing back their Porsche keys.
Prediction it seems is a precarious business and even respected ‘visionaries’ get it wrong. Thomas Edison was certainly barking up the wrong tree when he announced in 1922 that “this radio craze will die out”. Perhaps he should have had a drink with Thomas Watson, chairman of IBM, who stated 1949 “there is a world market for maybe five computers”.
In the 60 intervening years we have invented nuclear energy and the internet, but the cure for the common cold still evades us.
As good a starting point as any to predict 2003 is a glance backward at 2002. And if you happen to work in media then 2002 was a turbulent year.
We followed the (mis)fortunes of ITV Digital as it folded, as the Football League sued and as Digital Terrestrial Television re-emerged as Freeview.
The Communications Bill came to pass, bringing with it sweeping changes to media regulation and the creation of Ofcom. Non-European companies have been given permission to buy UK media assets. Granada and Carlton revealed the worst kept secret in media, their plans to merge, and the Government made it legally possible. Some newspaper circulations hit new lows, some cinema audiences hit new highs.
All this set against an advertising industry still coping with the burst of the dotcom/telecoms bubble and fall-out from September 11th. These two events certainly knocked the stuffing out of 2000 predictions for 2001. Estimates of a 3.6% total spend growth became an actual 5.2% decrease (Advertising Association Dec 2000/March 2002).
Expectations for 2002 are proving to be closer to the mark. A total advertising spend increase of 0.5% currently stands at a 0.3% (Advertising Association Dec 2001/Dec 2002).
This relative accuracy stems from the fact that when the country is not economically reeling from global punches, we carry on in a very British way. Regardless.
Consumer spending is stable. As a result, advertising spend is stable and media planners can quietly concentrate on following media consumption habits.
So what does 2003 hold? The reality is that Edison and Watson lived in relatively stable times, and still got it wrong. 60 years on, the interdependency of modern global economies means that if someone sneezes in the Middle East, we all catch a cold.
If the worst does happen then the knock-on effects will be resonate somewhere between those experienced in 1991 and 2001. Oil prices will rise, house prices will fall, consumer spending will stall and above-the-line advertising spending (so often the first to go in cost cutting) will re-trench. Spending plans will or course, fly out of the window. Either way though, from a media insider’s point of view 2003 has all the makings of a fascinating year as we watch 2002 II – The Sequel.
Will Sky buy Five? Will Carlton and Granada merge, only to be bought by AOL Time Warner? Will UK commercial radio put its editorial heritage in the hands of foreign owners as it’s bought by French and US outdoor companies? Will the BBC keep going after ratings at the expense of public interest programming (controversial) and be clipped by Downing Street?
From a media consumer’s point of view we will carry on doing much the same as we always have. Emmerdale will be is watched by 10 million regulars whether the ad revenue it generates goes to Granada or a merged ITV United.
The Sun will still be bought (less often perhaps) whether it has a partner in BSkyB or in Five as well. Digital Terrestrial TV will still come up against a resilient ‘never convert’ segment no matter who owns it. Cinema audiences will continue to rise as long as it remains a pleasurable experience and the film product is there.
And as long as we struggle about on the tube and get alternately rained on/frozen, consumer magazines will be there to help us escape. And more so than ever, according the Henley Centre.
It’s from a media planning point of view that the future is least certain? If the worst doesn’t happen and with all-things-remaining-equal, then the predictions that abound at this time of year, may well come to pass.
The Advertising Association has total spend up 6% year on year with TV the fastest growing medium at 8%. The share may move around a bit, along with the viewers, but in contradiction to a prediction from the New York Post in 1939 that “the average American family hasn’t time for television”, we still seem to find it.
Zenith Optimedia suggests that UK adpend will rise by 2.1%, against a global increase of 2.9%. MindShare put the UK increase at 2.4%, and Initiative Media have it at 4.6%. The difference between the most optimistic and the most pessimistic forecast may only be 3.9%, but this equates to around £450 million – not far short of the total advertising revenue for the radio industry in 2002.
Take an average and predict advertising revenue to rise by 3.7% and someone else will always be more wrong than you. The reality is that 2003 could be a good year for the advertising industry with revenues up, somewhere around that figure.
Then again, Nils Bohr, Nobel laureate in physics, had it right when he said “Prediction is very difficult, especially if it’s about the future.”
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