Analysts are quietly confident that 2004 will bring about an upturn in the US advertising market with demand being driven by economic confidence.
In a New Year update,
Merrill Lynch states that there are grounds for “muted optimism” regarding ad-supported media and restates its 5.8% ad growth forecast (see
Ad Growth To Accelerate In 2004, Says Merrill Lynch).
“As confidence regarding a sustainable economic recovery builds, we think marketers will launch new products and be more inclined to support brands with increased ad budgets,” said the report.
Merrill anticipates that ad agencies will participate in overall growth but euphoria should be tempered by compensation issues. In the current climate, marketers desire value for their investments and are increasingly turning to auditing firms to ensure that their expectations are met.
Demand soars in December There was a surge in demand for advertising inventory in the final month of 2003, according to figures from Mediapost and InsightExpress.
The December Ad Demand Index shows that 55% of US media planners and buyers believed that demand for advertising had increased relative to the same month a year earlier. When the survey was last carried out in September, just 44% had increased ad demand expectations (see US Ad Demand Grows In September).
Judging from the survey, the internet and cable television are most likely to gain from an influx of advertising dollars. There is also considerable support for radio and outdoor media but press continues to lag and less than one in five planners and buyers believe that demand for broadcast network TV has increased in the past year.
| US Ad Demand Relative To Last December, By Media |
| |
|
|
|
|
| |
Increased |
Same |
Decreased |
Net +/- |
| Online |
65% |
26% |
9% |
56 |
| Cable TV |
50% |
36% |
14% |
36 |
| Radio |
46% |
43% |
11% |
35 |
| Outdoor |
38% |
43% |
19% |
19 |
| Magazines |
27% |
43% |
30% |
-3 |
| Newspapers |
24% |
49% |
27% |
-3 |
| Network TV |
19% |
57% |
24% |
-5 |
| All Media |
55% |
39% |
6% |
49 |
| Source: MediaPost/InsightExpress, January 2004 |
| US Ad Demand Relative To Previous Months – All Media |
| |
|
|
|
| |
Aug-03 |
Sep-03 |
Dec-03 |
| Increased |
39% |
44% |
55% |
| Stayed The Same |
43% |
49% |
39% |
| Decreased |
18% |
7% |
6% |
| Source: MediaPost/InsightExpress, January 2004 |
Prospective issues Merrill Lynch analysts believe that the growing penetration of personal video recorders (PVRs), local cable ad revenues and internet paid search advertising will be hot topics in the coming year. Expectations regarding the TV upfront season are moderate with advertisers largely in agreement that rates are high enough.
The growing Hispanic population is seen as a potentially lucrative revenue source and publishers have launched new publications to serve Spanish language readers. However, Merrill is predicting newspaper adspend growth of no more than 4.5% in 2004 with an increase in employment advertising but ongoing weakness in cars, real estate and retail.
