Advertising agencies and media revenues are forecast to experience a slow, U-shaped recovery to the ad market, rather than a fast V-shaped one, according to analysts at Merrill Lynch.
The broker says that it continues to expect revenues to be down for most media during the first half of the year, with only ‘muted’ gains forecast for the second half. “While there are some signs of stabilisation we have yet to see any true positive change in momentum,” it says.
Merrill is forecasting global advertising growth of -2.1% this year, followed by 3.9% in 2003. Zenith Optimedia has recently downgraded its global forecast for 2002 from 0.8% to -1.9%, bringing it more in line with Merrill Lynch’s estimate.
| Global advertising growth forecast |
| |
|
|
| |
2002 |
2003 |
| Merrill Lynch |
-2.1 |
3.9 |
| Zenith Optimedia |
-1.9 |
n/a |
| |
|
|
| Source: Merrill Lynch, 30/04/02 |
|
|
Conflicting views Merrill Lynch says that it has heard conflicting news from media companies, “with Viacom in the US being extremely bullish, and TF1 and ProSieben in Europe being cautious and stating that there is still no visibility and that the market is still very short term.”
As a result of the uncertainty, stock in ad agencies is currently relatively cheap and will remain so for the near-term.
