The revival in the advertising economy is well and truly underway, with the US driving the upturn, and signs are that 2004 will be a good year for the industry. That was the essence of a speech by WPP supremo, Sir Martin Sorrell at a prominent gathering of media executives this week.
The
Lehman Media Conference featured a number of high profile speakers including Martin Stewart, chief financial officer at BSkyB and Andy Duncan, BBC Director of Marketing & Communications.
Not surprisingly, television issues were to the fore with Stewart delivering an upbeat outlook for the satellite broadcaster while Duncan lauded the progress of the DTT platform Freeview which is expected to have been adopted by two million homes by the end of next month (see Freeview Could Be In 2 Million Homes By First Birthday).
However, the star turn was Sorrell who, bereft of his customary caution, has begun to detect an improvement in advertising conditions (see Ad Market Begins To ‘Climb Out Of The Bath’, Says WPP). WPP. the world’s third largest advertising group, has seen organic growth in the US for twelve straight months and the whole market was boosted by this year’s record TV upfront season.
Sorrell said that Asia (excluding Japan) was prospering although the European market is mixed with the UK ‘particularly tough’. However, central and emerging Europe are performing well and Latin America has recovered from a poor 2003.
Trading outlook Media buying is the best performing category as it is commission driven and therefore geared to changes in actual advertising spending and prices. WPP saw 2% organic growth in July (see WPP Undeterred By Profit Fall) and anticipates similar improvement for August. The group maintains that the second half should be better than the first, when growth was flat. By comparison, Lehman is forecasting 1.2% for the second half and 0.6% for the year.
Like many observers, Sorrell believes that 2004 will be a good year with growth in advertising and marketing likely to be at the top end of a 2-4% range. The Athens Olympics and the US presidential election will help to drive up revenues and Lehman estimates that WPP will see organic growth of 4% next year.
While WPP reaps the profits, the upswing in trading conditions has not benefited everyone. The French-based advertising firm posted a first half loss of ₏58 million and is to undergo its third strategic restructuring in five years. Sorrell compares its situation to that of Cordiant and doubts whether it will be successful in integrating the marketing agencies that make up Euro RSCG and MPG.
