OMD Sees Advertising And Media Turnaround In 2003

The economic state of play Citing data from numerous sources, OMD says that after a short, sharp shock in 2001, the global economy has been resilient in recovery and prospects are expected to improve into 2003, despite some weak sectors remaining.

In the US, despite a much-mooted full recession, the economy only actually contracted by 0.3% in Q3 2001. The speed of recovery then increased in Q1 2002, but observers remain in fear of a “double dip” in the third quarter (see New Forecast Warns Of Continuing Ad Slump).

In Europe, recovery has not been as fast as the US and stagnant growth in its largest economy – Germany – has depressed the rest of the continent. However, OMD expects the climate to improve during 2003.

Economic growth rates in the UK are forecast to be around 2.7%; this is relatively strong compared to recent history, says the agency. Within this growth, consumption is expected to begin to slow, which could in turn impact on advertising (see Ad Spend Could Hinge On Consumer Spend, Says Merrill Lynch).

Advertising In terms of overall trends, OMD says that the recent advertising downturn is due more to pressure on corporate profitability and equity prices than it is to sales volumes and market dynamics.

“This has been demonstrated across 2001/2002 where advertising growth slowed dramatically ahead of consumption patterns and more in line with profitability and share performance. However, there are signs the media markets are returning to marginal growth as we enter the second half of 2002,” says the report.

Accordingly, the group says that when the more benign economic outlook and the flat media market are taken into account, the advertising market place should return to tentative growth across 2003.