Insight Analysis: ABN AMRO Downgrades UK Media Forecast With No H2 Recovery
ABN AMRO has downgraded its full year forecast for UK media from 0.4% to -1.6%, following the release of data from AC Nielsen MMS indicating that in June the market slipped 13.7% year on year. The broker says its revised forecast reflects “the increasing likelihood that there will be no significant second half recovery.”
| FY2001 forecasts by media | |||
| Old | New | Change | |
| TV | -4.3 | -4.3 | 0.0 |
| Radio | 0.4 | 0.4 | 0.0 |
| Magazines | 2.0 | 1.6 | -0.4 |
| Newspapers | 3.0 | -1.7 | -4.7 |
| Outdoor | 4.0 | 3.1 | -0.9 |
| Total | 0.4 | -1.6 | -2.0 |
| Source: ABN Amro estimates | |||
Television and radio growth had already been downgraded, but press, and particularly newspapers, now look set for a disappointing H2, says ABN.
In June last year advertising grew by more than 17% – ‘a tough comparable’, the broker notes, but no tougher than that faced in April, when UK advertising growth was 10%. “This gives some indication of the scale of the deterioration of the UK ad market,” says the report.
Both the Advertising Association and Zenith Media have downgraded their UK ad growth forecasts and global analysts have knocked back their worldwide ad growth predictions, as shown. The ABN figures shown as New in this table are prior to this week’s further downgrades. The latest data are shown the next table down.
| ÂÂ | Previous | New | % Point Change |
| UK TV | 2.7 | 2.0 | -0.7 |
| UK Radio | 11.2 | 9.5 | -1.7 |
| UK Outdoor | 9.5 | 7.8 | -1.7 |
| UK National Newspapers | 3.9 | 5.6 | 1.7 |
| UK Regional Newspapers | 3.7 | 3.3 | -0.4 |
| UK Consumer magazines | 2.0 | 2.1 | 0.1 |
| UK Business Magazines | 0.2 | 4.8 | 4.6 |
| UK TOTAL | 3.6 | 3.9 | 0.3 |
| UK Television | 1.0 | -4.3 | -5.3 |
| UK Radio | 5.0 | 0.4 | -4.6 |
| UK Magazines | 3.0 | 2.0 | -1.0 |
| UK Newspapers | 4.0 | 3.0 | -1.0 |
| UK Cinema | 4.0 | 4.0 | 0.0 |
| UK Outdoor | 5.5 | 5.5 | 0.0 |
| UK TOTAL | 3.2 | 0.4 | -2.8 |
| Global adspend growth | 3.4 | 1.3 | -2.1 |
| US adspend growth | 1.9 | 1.0 | -0.9 |
| Global adspend growth | 2.4 | 1.5 | -0.9 |
| Global adspend growth | 3.6 | 0.8 | -2.8 |
| Global adspend growth | 5.8 | 2.5 | -3.3 |
| Sources: | |||
| Advertising Association, revised March 2001 | |||
| ABN Amro, revised June 2001. | |||
| Myers, revised May 2001 | |||
| Zenith Media, June 2001 | |||
| Robert Coen, revised June 2001 |
The following table shows how the different forecasts now compare, with averages of the figures given.
| UK ad growth predictions | ||||
| ÂÂ | Advertising Association | ABN Amro | Zenith Media | Average |
| UK TV | 2.0 | -4.3 | -4.7 | -2.3 |
| UK Radio | 9.5 | 0.4 | 5.0 | 5.0 |
| UK Outdoor | 7.8 | 3.1 | 7.0 | 6.0 |
| UK Press | – | – | 0.1 | 0.1 |
| UK Newspapers | 4.5 | -1.7 | – | 1.4 |
| UK Magazines | 3.5 | 1.6 | – | 2.6 |
| UK TOTAL | 3.9 | -1.6 | -0.8 | 0.5 |
| Sources: AA, ABN Amro, Zenith Media, MediaTel Insight | ||||
Looking at the two-year growth rate figures from MMS, ABN calculated that H2 will show extremely low growth and there will no bounceback.
TV and newspaper display advertising have been the most significant victims of the recent declines with the former seeing a 16.0% decline in June, translating to a 13.1% decline for the quarter. The latter saw a 16.3% decline during June, giving a 13.0% fall for the second quarter of the year. Only magazines bucked the downward trend, staying flat for the quarter and dropping just 0.8% for June.
The report by ABN adds that data for July and August will be key in determining whether the dismissal of the market’s chances for recovery is premature, or whether further deterioration will occur.
Nevertheless, ABN has forecasts that the ad market, with the exception of TV advertising, should turn positive in August, with TV following in September. “We expect all of the major media to show limited year on year change thereafter, with TV outperforming the rest of the market, partly because of its comparative weakness in Q4 2000.”