Lehman Brothers Predicts Positive Global Ad Growth In 2002

The investment bank notes that advertising is the single most important factor in the global media sector’s recovery. It is forecasting a global growth of 0.6% for 2002 and 3.8% in 2003; Zenith Media forecasts -1.4% and 1.5% for this year and next respectively. The US is expected to show the strongest growth, with Europe trailing slightly.

Advertising Growth Forecasts Comparisons
	2002		2003
	Zenith	Lehman	Zenith	Lehman
US	-0.1	1.4	1.5	3.7
Europe	-3.0	-2.0	1.8	3.5
Japan	-3.0	-0.9	1.9	0.9
Total	-1.4	0.6	1.5	3.8
Source: Lehman Brother, September 2002

US The US is now showing signs of sustained recovery, with the bottom having been hit in Q4 2001, according to Lehman analysts. The strong television upfront season there has been particularly encouraging, showing growth of almost 15%.

However, Zenith has warned that even in a good year, upfront spend accounts for only 25% of all TV and 10% of all media and a large proportion of future bookings are cancellable. Nevertheless, the indications are currently that cancellation rates are very low (see US Advertising Update From Merrill Lynch). The scatter market, which follows the upfronts, has also been strong (see US Scatter Market Virtually Sold Out).

Returning growth in the US markets is slowly beginning to emerge, with both Zenith Optimedia (see Zenith Warns Of No Real Recovery Until 2004 In Global Ad Forecasts) and Aegis (see Aegis Upgrades US & Asia Ad Forecasts, Downgrades Europe) upgrading 2002 revenue forecasts for the region. However, an indication that recovery is far from strong comes from a recent downgrade to figures for 2003 from analysts at Merrill Lynch (see Merrill Lynch Lowers 2003 US And Global Ad Forecasts).

Europe The European television markets are showing a mixed picture, according to Lehman. The UK, France and Italy are all encouraging, but Germany is weak. This picture concurs with Zenith’s assessment of European ad trading (see Zenith Warns Of No Real Recovery Until 2004 In Global Ad Forecasts), in which the UK is currently the strongest market, as shown.

Asia (excluding Japan) Lehman Brothers says that advertising remains weak in externally-oriented economies such as Hong Kong, Singapore and Taiwan, while domestically-driven Korea, China and Thailand have continued to experience the strong growth in advertising spending that began in Q1 2002.

Overall, the forward strength of global media markets depends heavily on two factors, says the report. The first is the shape and intensity of any economic recovery and the second is whether there is a war in the Middle East.