INSIGHTanalysis: Media Healthcheck – July 2004

From April to June 2004, the survey results, which are drawn from a panel of over 250 UK marketing professionals and act as a barometer of the relative health of the industry, said media budgets were revised upwards for the second consecutive quarter, with internet advertising singled out for praise as spending in this sector rose for the ninth consecutive quarter.

Commenting on the report, chief executive of WPP, Sir Martin Sorrell, said: “In a way the Bellwether Report findings are not surprising. Growth in corporate profitability, operating margins and liquidity is strong – perhaps the strongest for 20 years. The really encouraging signal is the switch to brand building through media, direct and internet related marketing. Perhaps brands are becoming more important, thankfully.”

Although things are picking up in the UK, Merrill Lynch said that along with the rest of Europe, Britian is lagging behind the worldwide average recovery. Advertising in Europe is rising roughly in line with GDP and not ahead as it usually does and as Merrill Lynch predicted. The update went on to say that considering the much needed boost from US political spending and the Olympics, mediums are still performing weaker than they have in the past.

However, there’s good news for Europe by 2005 if ZenithOptimedia’s revised forecast comes to fruition. Advertising growth is expected to overtake the US and grow by 4.2%, according to the media agency, who decided to revisit its previous 3.7% forecast after the 2003 Europe-wide prediction of 1.8% was beaten when growth reached 2.5% for the year.

ZenithOptimedia added that the internet is expected to be a key player in producing revenue and by 2006 will account for 2% of Europe’s major-media advertising budgets.

Internet Advertising

This month, internet advertising has taken centre stage in the press as predictions from Jupiter Media said that online advertising is expected to overtake advertising in the magazine sector by 2008 as spending exceeds over half a billion dollars.

However, in contrast the World Association Of Newspapers (WAN) said that the migration of classified advertising from print to the internet has been much slower than many predicted. A study from WAN revealed that in Europe 3.5% of classifieds are now on-line, with automotive advertising leading the migration. In the US, nearly 5% have shifted, with recruitment advertising in front.

In an interview with the Independent, Sir Martin warned of the increased pressure put on paper and magazine publishers by the internet. He said: “I think the challenge facing paper publishers – newspaper and magazines – is getting greater and greater. I read less weeklies and fortnightlies. I don’t get my ‘market close’ from the FT anymore – I get it from Bloomberg the night before. Can I wait for Fortune or Business Week or The Economist? The answer is probably ‘no’.

Whatever people think of internet advertising, there is no disputing with the fact that it is a fast growing medium and many continue to pin high-hopes on it. The Interactive Advertising Bureau and PricewaterhouseCoopers (PWC) revealed this month that UK online advertising in 2003 beat all records as spending reached more than £350 million.

Director of PWC, Paul Pilkington, said that the internet advertising industry is well on track to beat its own target of doubling in size every three years, with the overall aim being to increase its share of advertising budgets to eventually overtake radio by 2007.