INSIGHTanalysis: Media Healthcheck – June 2005
The media market in June saw a number of forecasters analysing advertising expenditure, in both the US and UK, with online shown to be surging in popularity both in terms of share of adspend and the growth of the number of homes with access to the internet.
This expected growth is echoed by analyst Merrill Lynch, in forecasting online adspend to reach a massive $25 billion by 2009 and $12.4 billion this year. Paid for search listings in the US look set to grow by 47% this year, with sponsored search adspend in the States expected to increase by $1.6 billion, up to around $5.1 billion this year, from $3.5 billion in 2004 (see Merrill Predicts Strong Growth In US Online Adspend).
Nielsen Monitor-Plus revealed that US advertising expenditure rose by 2.4% year on year in the first quarter of 2005, with adspend increasing in almost all reported media. Spanish-language TV, cable TV and magazines all led the way in terms of adspend, with the network radio and national newspaper sectors essentially flat. Coupon and the top 100 spot TV markets both showed declines, with the latter down by 3.9% year on year (see Nielsen Shows US Adspend Up By 2.4% In Q1 2005).
Local magazines were revealed by TNS to have benefited the most during the first three months of 2005, with adspend increasing by 26.2% to $104 million, while consumer magazines grew by 9.5% to $4.7 billion, year on year.
Sunday magazine adspend was up by 14.5% to $398 million, compared to the same period last year. The cable television sector continued the upwards trend, rising by 18.2% year on year in Q1 2005, to reach $3.5 billion.
This positive year on year growth was mirrored by the UK advertising market, with the Advertising Association revealing UK adspend to have totalled £3,993 million in the Q1 2005, rising by 5.3% compared to the same period in 2004 (see UK Adspend Up 5.3% In Q1 2005).
The internet confirmed industry predictions for a strong performance, rising by 48.9% year on year, while television adspend, increased by 11.7%, reaching £1,019 million. Outdoor advertising expenditure and cinema also enjoyed growth, rising by 12% and 16.8% respectively for the same period.
However, late June saw two top industry forecasters revise downwards their predictions for the US advertising market in 2005, with Merrill Lynch and TNS Media Intelligence releasing less optimistic estimates for the industry.
Merrill revised US growth to 4.5% from the previously expected 4.8% growth, with global advertising predictions dipping substantially to 3.8% from earlier estimations of 4.6% (see Merrill Revises 2005 Ad Growth Forecasts Downwards).
The analyst’s expectation for European advertising growth in 2005 continued the downwards trend, revised to 2.5% from 4.5%. The following year looks stronger, with the analyst predicting growth of almost 6% in 2006, buoyed by spending related to the football World Cup taking place in Germany and recovery in certain markets.
Overall, Merrill believes advertising growth in 2005 reflects a weaker than average economic recovery coupled with low inflation, as well as difficult comparisons created by political events last year.
TNS predicted muted adspend growth in 2005, estimating advertising expenditure in the US to reach $145.3 billion in 2005, up 3.4% year on year; not quite the impressive growth of 9.8% enjoyed by the industry in 2004 (see TNS Predicts Muted Adspend Growth In 2005).
The internet was forecast to be up by 7.6% like for like, a healthy increase but not as strong as the double-digit growth seen by the medium over the last two years.
Magazines were predicted to be up by 7.5% year on year, with outdoor adspend rising by 5.5%. Newspapers are expected to rise by 3.8% compared to the same period in 2004. TNS estimate syndication television to rise by 3.3%, while network TV adspend is forecast to grow by just 1.1%.