Modest growth in the advertising industry is expected for 2003, with the media agencies benefiting more than the creative agencies, according to key industry figures.
Jerry Muhlmann, CEO of Carat International, told a
Merrill Lynch event that his group is predicting a ‘modest’ 3.0% rise in global ad growth for 2003. Europe is forecast to grow by 1.7%, the US by 3.0% and Asia by 4.1%. More rapid global growth of 4.0% is expected in 2004 and 2005.
ZenithOptimedia, also at the event, broadly concurs with Carat’s estimates, whilst Merrill Lynch is slightly more pessimistic on 2003, predicting a 1.9% rise, and is more optimistic on next year, forecasting a 4.7% global rise. Most commentators were sceptical of a more aggressive recovery in 2004, given continued attention to costs by the corporate sector and a possible weakness in consumer spending.
Move toward planning and strategy The broker also reports that secular trends show media agencies more positive than the creatives, as the power shifts toward planning and strategy. Merrill says that whilst these trends are not terminal for creative ad agencies (if they can adjust their business models), continuing pressure on their margins appears likely.
A number of factors were cited as contributing to this shift in favour of media agencies. More fragmented media markets means that advertising clients must target customers at many different levels and so planning and strategy become key to this process. Also, an involvement earlier in the decision process has given media agencies more sway over where to direct expenditure; often away from creative and into sales promotions, according to Merrill Lynch.
