Figures released yesterday by the Advertising Association (AA) show that every medium bar business press showed a positive year on year growth in revenues in the fourth quarter of 2002. Go back to the first quarter of the year and only direct mail and regional newspapers are showing positive growth.
There has therefore undoubtedly been an improvement in advertising spending across the course of last year, with each quarter showing a better growth rate than the last. First quarter 2002 total spend was down 6.0% in current prices; Q2 grew just 1.1%; Q3 grew by 3.6% and Q4 nudged up again to a 4.9% rise on a current currency basis.
Whilst growth has improved across the year, the latter period only just managed to mitigate the weaker start, with full year spend rising just 0.8% over 2001 to £13.9 billion (according to the preliminary AA figures, which exclude cinema, internet, directories and production costs). In 2001, the total spend including these extra categories was £16.5 billion. So, assuming an overall growth of 0.8% for the full-year 2002, total advertising will be around £16.6 billion.
There is no doubt that the advertising sector is suffering a rough period, with marketers’ confidence shaky and year on year growth still pretty weak. However, it is worth remembering that 2000 was a definite boom year and that has skewed the growth figures ever since. When compared to 2000, 2001 figures were down by 2.6%, but when compared to 1999 they were up by 7.3% – in line with growth rates across the latter half of the 1990s.
However, this kind of comparison, as well as being hypothetical, does not help 2002’s figures, which were pretty weak against 2001 anyway. Furthermore, 2000’s 10.2% year on year growth in adspend was exceeded by 1994’s 10.9% and 1997’s 10.4% rise, but the two years following ’94 and ’97 did not show a resulting decline: 1995 rose another 8.8% and 1998 grew 8.0%. On this basis 2001 and 2002 are truly weak years.
Uncertain prognosis So, what’s the situation looking ahead? Well, the threat of war with Iraq adds a whole layer of uncertainty to markets across the globe at present and there is a certain sense of ‘wait and see’ across the media and advertising community at present.
Neil Blackley, who was one of Merrill Lynch’s top media analysts, damningly said that the media industry is currently in a ‘dire’ decline, which shows little sign of being fully reversed. His team sees no turning point despite the ‘crumbs of comfort’ offered by a slowing rate of decline.
Blackley’s warning specifically to the UK is that there is likely to be the much-feared ‘double-dip’ in the markets as consumers stop spending money. Even so, this has not yet taken hold and media consultancy Billetts says that the UK is battling the economic and advertising downturn fairly well at present.
Overall, though, it’s hard to call and most UK media companies are therefore sensibly not bothering, preferring instead to talk of uncertainty and continued lack of visibility. Muted and unspectacular growth seems likely.
