Coen Pulls Down 2003 Ad Forecasts

Following a slightly weaker than anticipated first half, full-year 2003 US adspend growth has been cut from December’s 5.0% forecast to 4.6% (see Universal McCann Expert Upbeat On Ad Prospects). Within this, national growth has been reduced from the previous 5.3% to 5.2%, whilst local is brought down more significantly from 4.5% to 3.5%, as shown.

US Advertising Growth Forecasts
	2002A	2003 Old	2003 New
National	2.6	5.3	5.2
Local	2.2	4.5	3.5
Total	2.4	5.0	4.6
Source: Universal McCann, June 2003

The overall reduction is principally a result of the local advertising growth downgrade. Recruitment classifieds have been weak and the pace of retail advertising has been slower than expected, according to Merrill Lynch. These factors have hit the local market more significantly than the national market.

Across the board, the second half is expected to be stronger than the first, with the completion of the war and an improving economy. Moving into 2004, the markets are set to firm up even more.

The predictions by national and local categories show around half of national sectors have been reduced, with some categories receiving an upgrade; internet spend is notable – raised from no growth in December’s report to 5.0% growth in these figures. In the local sector, every category bar other media has been reduced.

Nevertheless, Merrill Lynch analysts note that the revisions are pretty small given the substantial uncertainties at the beginning of the year. Coen’s adjustments are also in line with revisions made to the broker’s own forecasts earlier in the year (see Latest US And Global Ad Forecasts From Merrill Lynch), although he remains on the more optimistic side of the consensus.

US Advertising Growth Forecasts
	2002A	2003 Old	2003 New
National
Four TV networks	4.9	4.5	4.0
Spot TV	18.4	2.0	-1.0
Cable TV	2.5	7.5	10.0
Syndication TV	-2.2	4.0	8.0
Radio	12.2	5.0	4.2
Magazines	-0.9	5.5	7.0
Newspapers	2.9	6.0	5.5
Direct mail	3.0	7.0	6.5
Yellow pages	0.0	5.5	1.5
Internet	-13.5	0.0	5.0
Other media	-0.4	5.5	3.8
Total	2.6	5.3	5.2
Local
Newspapers	-1.1	4.5	3.5
TV	6.9	3.0	2.5
Radio	4.0	5.5	4.0
Yellow pages	1.6	3.5	1.5
Other media	5.0	5.1	5.6
Total	2.2	4.5	3.5
Source: Universal McCann, June 2003

Global predictions Internationally – that is to say, outside the US – Coen is forecasting growth of 4.0% this year and 4.5% in 2004. For the global advertising market, he predicts growth of 4.3% this year and 5.6% in 2004.

The UK is expected to rise by 3.5% this year, after just 0.4% growth in 2002 (for reference, the Advertising Association puts UK growth at 0.8% in 2002). Elsewhere in Europe, France’s growth is expected to retract from last year’s 3.4% to 3.0% in 2003. Similar declines are expected in Germany.

Worldwide Advertising Expenditure Forecasts
	US		Non-US		Global
	$bn	% Change	$bn	% Change	$bn	% Change
2002	236.9	2.4	213.6	1.9	450.5	2.2
2003F	247.7	4.6	222.1	4.0	469.8	4.3
2004F	263.8	6.5	232.1	4.5	495.9	5.6
Source: Universal McCann, June 2003