INSIGHTanalysis: Media Healthcheck – January 2004

Initiative forecasts a 5.8% rise in global advertising this, after an expected growth rate of 4.8% in 2003. The UK’s adspend is forecast to finish 2003 up by 2.2% year on year, before hitting growth of 4.2% this year. The US will be stronger at a growth rate of 4.3% last year and 4.9% this year.

Across the 44 countries that feature in Initiative’s report, advertising growth is expected to outpace economic inflation by over three and a half times. It is worth noting, though, that despite the accelerating growth throughout the world, 2004’s expenditure will only just return to the expenditure levels of 2000 when measured in constant currencies, as shown below. Nevertheless, 2004 should finally recoup the heavy losses of 2001.

Jean-Philippe Cotis, chief economist for the Organisation of Economic Cooperation and Development (OECD), also believes that the global economic recovery now appears to be shaping up, with the US leading the way. However, Cotis was keen to point out that in most countries the upturn is weaker than previous recoveries have been, saying that there is no room for complacency.

US forecasts from TNS Media Intelligence/CMR predict that the ad market there will rise by 7.8% in 2004, boosted by the Olympics, the presidential elections and an improving economy.

The UK picture In the UK, the IPA’s Bellwether Report also illuminated a rising tide of corporate optimism, which could see advertising here return to levels not seen since the dotcom boom. The study found that improving economic conditions have prompted more than half of companies to increase their overall annual marketing budgets for the coming year, with just one in five reducing spend.

Overall, the Bellwether Report found the outlook to be the most optimistic since 2000.

The Chartered Institute of Marketing (CIM) says that marketing spend is expected to increase by around 3% this year, but warns that the economic recovery will not be as swift as first thought. Essentially, the CIM remains a little more cautious on prospects than the IPA.

The UK is currently one of the stronger of the six largest OECD countries and is expected to remain second only to the US in terms of GDP growth over the course of the next two years. The OECD recently raised its 2004 GDP growth forecast for the UK from 2.6% to 2.7%, reflecting the improved outlook.

Initiative’s UK forecasts are that advertising will outpace the economy, suggesting that we should finally be in for a relatively strong year.

The Technology, Media and Telecommunications (TMT) FTSE shares index rose by 10.3% during January 2004 as shown.