Insight Analysis: Media Healthcheck – February 2002
Moving into the middle of Q1 2002, the consensus amongst media and advertising groups is that an ad recovery is not likely to emerge until into the second half of the year at the earliest. Visibility – the extent to which market developments can be predicted – remains poor and so even a H2 recovery is not a given.
Not everyone attending the World Economic Forum in New York had as negative an outlook as Sorrell. Although the general consensus of opinion seemed to be that an upturn in the economy should be expected no sooner than Q3/Q4 2002, there are some who believe that the stringent cost-cutting measures employed in 2001 may aid a more rapid recovery.
UK
The UK’s largest newspaper publisher, Trinity Mirror, is preparing for advertising conditions to remain tough ‘throughout most of the year’ (see Trinity Mirror Results Beat Expectations, Mirror Relaunch Announced). Meanwhile, Regional Independent Media (RIM), talked of 2002 ‘remaining uncertain’, although it offered an optimistic outlook for the performance of its regional newspapers (see City News).
ITV’s ad revenue for the October 2001 to February 2002 period is expected to be around 12% down year on year, according to Carlton Communications (see ITV Revenues Predicted To Be 12% Down In Five Months To February). However, the World Cup in June is expected to revitalise interest from many of the bigger advertisers.
The latest UK advertising growth forecasts from Zenith Media and the Advertising Association (AA) have been posted Latest UK Ad Growth Forecasts From Zenith And AA. The consensus is for a slight growth in 2002, averaging at 0.6%. The AA has not produced forecast data for 2003 and 2004, where Zenith predicts 2.9% and 3.2% growth respectively.
Europe
Pan-European broadcaster RTL Group today said that it does not expect conditions to improve before the second half (see RTL Falls Into Red, Channel 5 Revenues Down 9.0%). At the same time Pearson, owner of the Financial Times, said that the ad market will remain flat this year (see Ad Market In 2002 Will Be ‘Flat’ Says Pearson), adding that there is currently no further deterioration being experienced.
German advertising spend declined by 9.8% in December last year, according to an analysis of ACNielsen data by ABN Amro. The full year 2001 showed total adspend down 7.1% in Germany (see German Ad Market Drops 7.1% In 2001). The UK, by way of comparison, dropped around 4.0% in 2001 (see UK Advertising Growth Forecasts Update).
US
Economic growth in the US in Q4 2001 was better than analysts had predicted and led to the Federal Reserve deciding against a further cut in interest rates in February. “My view is that the US recession is over, that November will be viewed as the trough,” said Gail Fosler, chief economist at the US Conference Board (see Whispers Of Recovery From WEF Meeting In NY).
The very tough trading conditions in the US hi-tech advertising market continue, according to figures for United Business Media’s (UBM) CMP Media, released at the beginning of February (see US Hi-Tech Ad Market Remains Weak, According To CMP Figures).
The group says that advertising page volumes at CMP declined by 38.3% in December 2001; in November volumes fell by 39.8%. This suggests that the decline is stabilising, but in fact there were more trading days in December than there were in November. CMP estimates that volumes across the whole market were down by 43.4% in December. The outlook is that the weakness will continue for the coming quarters, with negative newsflow surrounding the sector.
Total US magazine advertising revenue for the month of January closed at $799.9 million, a 9.6% decrease on last year, according to the latest data from the Publishers Information Bureau (see US Magazine Ad Revenue Drops 9.6% In January).
US broadcast network TV advertising will decline 7.4% in 2001, to $15.5 billion, with a further 3% decline in 2002, according to analysts at ABN Amro. The broker cites the ongoing economic downturn as the cause of the decline (see Economics Of US Network TV Are Becoming ‘Untenable’ As Revenues Drop, Says ABN Amro).