Feature: Future Predictions

When Zenith downgraded its media forecast for 2001 once again at the end of August the doom-merchants intoned “ad revenue recession” even more gloomily. If Zenith’s -3%, or even ABN AMRO’s -5.4% UK ad growth prediction comes to pass, it will be the worst since the recession at the start of the last decade. But are we too quick to be pessimistic?

There are a number of factors that have affected this year. The dotcom fallout is one, as the internet boom inflated revenues for the first half of 2000, making year on year comparisons tough. Then, advertisers’ increasing dissatisfaction with ITV over its inability to deliver the audiences its prices demanded saw the Network receive its worst revenue figures for some time in the second half, fuelling downturn fears.

The US economy’s slide in the advertising industry, which started with a slump in automotive revenue, caused more jitters this side of the Atlantic. Yet it appears that our economy is not as tied to US fortunes as it has been and so far hasn’t followed suit. Issues at home such as the foot and mouth crisis, which hit local newspaper revenues, for example, probably had a greater effect.

There comes a point beyond which tough year on year comparisons and isolated factors such as foot and mouth cannot be blamed, however, and as Denise Gardiner, insight and effectiveness director at the Media Planning Group, points out, “As media fragments all sectors of the media industry are having to redefine their role in the communications mix in order to maintain levels of revenue and identify new sources of income.”

While the possibility of a downturn in consumer confidence leading to a recession in the wider economic community remains, Zenith and ABN are positive at present about the future, predicting 2002 growth of 2% and 3.7% respectively. TV was the only sector to see a yearly fall in revenue, of 2.3%, for the first quarter of this year, according to the Advertising Association. The AA recorded 5.5% growth across the industry, including 19.3% for the outdoor sector. This doesn’t look like the “two consecutive quarters of negative growth” that defines a recession for the industry.

“I believe this period, however long it might last, is more of a corrective measure than a recession, a slowdown, a levelling off. We are also seeing a shakeout with the strongest surviving and the weakest carrying out some pruning,” concludes Gardiner.

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