INSIGHTanalysis: Media Healthcheck – December 2003
Media and advertising organisations entered the New Year in a positive frame of mind following a number of encouraging pronouncements from doyens of the industry. Global adspend is predicted to grow by around 5% in 2004 with the US leading the way and Europe again showing signs of competitivemess.
A recent survey carried out by the Patrick Marketing Group found that 75% of marketing executives thought that the economy remained lacklustre. However, there is a groundswell of belief in recovery and this is borne out by analyst forecasts.
Merrill Lynch states that there are grounds for “muted optimism” regarding ad-supported media and predicts that US adspend will grow by 5.8% in 2004 (6.0% without direct mail) following a 2.7% increase last year. Global spend is set to rise by 5.0%, up from 2.1% in 2003.
Expenditure on marketing and communications in the world’s major markets is set to jump by 4.4% this year, according to a study by the French advertising group Havas. The rival Aegis Group predicts that global adspend will climb 4.7%, spurred by growth of 6% in Asia Pacific, 4.7% in the US and 3.6% in Europe.
ZenithOptimedia says that the worldwide economy will outpace its long-term growth rate this year for the first time since 2000. Typically in an advertising recovery, the ad market will grow at a faster rate than the wider economy. The media services agency expects to see advertising growth of 5.0% and 3.7% in North America and Europe respectively and 4.7% overall.
Some commentators believe that ad growth is already ahead of GDP. Robert Coen of Universal McCann has raised his US forecast for 2003 growth from 4.6% to 5.2% and his 2004 estimate has been taken up from 6.5% to 6.9%.
This confidence is well placed judging from a poll of media planners and buyers by Mediapost and InsightExpress. The December Ad Demand Index shows that 55% of respondents believed that demand for advertising had increased relative to the same month a year earlier.
Further encouragement can be gleaned from the fact that 2004 features the Olympic Games and the US presidential elections, both of which should guarantee a glut of advertising dollars.
UK synopsis Increased confidence in the UK advertising sector was yet to have a discernible effect on revenues by the third quarter of 2003, with Advertising Association figures showing a nominal rise of just 0.2% year on year and a decline of 2.6% after adjusting for inflation.
However, 2004 has started on a brighter note with the latest BDO Business Trends Report showing business optimism to be at its highest level for over three years. The study predicts that an improving world climate will lift the UK’s economic growth to 2.3% in the first half of the year and there should be a knock-on effect for the advertising market.
The latest forecast from ZenithOptimedia suggests that major media spend will rise by 3.2% in current currencies this year, following a 1.1% increase in 2003. Football’s European Championship finals should help drive UK television revenues up by 4%, a filip for the soon-to-be-merged ITV.
Universal McCann believes that adspend will grow by 3.0% over the next twelve months, before rising to 5.5% in 2004. This is a little stronger than the growth figures predicted for most other major European advertising markets.
The Technology, Media and Telecommunications (TMT) FTSE shares index declined by 2.8% during December as shown.
