There is a ‘significant risk’ that the advertising recovery could be delayed until the second half of 2002, according to a report by analysts at ABN Amro, released on last week.
The broker predicts that globally ad revenues will decline by 2% next year, following the 5.3% decline of this year. The first half of 2002 is forecast to be even weaker than this year – down by 5.8% – with positive growth only coming through by the second half.
There is a lag in the recovery of advertising behind that of the general market following a recessionary period, say the analysts. During the last recession, after three years of negative growth, advertising levels took ten years to return to previous levels.
ABN thinks that there has been a fundamental structural erosion of the advertising market, meaning that when the recovery does come it will only return to its long-term growth rates. This erosion is a result of the deterioration of technology and telecoms adspend, much of which will never return. The broker describes this recovery pattern as L-shaped, rather than the more positive V-shape.
