Insight Analysis: Media Healthcheck – January 2002

In terms of UK media spending (see UK Advertising Forecasts 2001/2002 Round-Up), average spending growth estimate is 0.6% for the year although the analysts vary considerably from the ever-cautious ABN AMRO’s -1.7% to Universal McCann’s optimistic +2.5%.

US

The ongoing impact of the 11 September attacks on the US media continued with magazine revenues falling yet again. With the release of December totals (see US Magazine Adspend Decline Continues In December), Ellen Oppenheim, executive vice president/chief marketing officer, Magazine Publishers of America commented: “The declines in magazine advertising we’re seeing now can be attributed to the fact that the December monthlies closed their issues around the middle of September. The tragic events that occurred during this time made it difficult for advertisers to make media commitments”. US newspapers also continued to suffer (see US Newspaper Revenues Remain Weak In Early 2002).

According Merrill Lynch’s chief investment officer, Bob Doll, positive economic growth in the US will return by no later than early Spring and real growth could be reasonably strong by the second half (see US Will Lead World’s Economic Recovery, Says Merrill Lynch Chief). Dow Jones, publishers of the Wall St Journal released results which showed a slight increase in profits but a decline in ad volume (see Dow Jones Moves Into Profit But Ad Volume Drops).

Europe

According to a survey from agency network OMD Europe, released in January, European advertisers and marketers are more upbeat about the economic prospects for 2002 than are consumers. Just 5% of marketers intend to cut their budgets this year, whilst a third of the 500 working consumers questioned, said that they will be reigning in their personal spending (see European Advertisers Confident On 2002 Budgets).

This sentiment was echoed by Alain de Pouzilhac, CEO of French media and advertising group Havas. De Pouzilhac is expecting 2002 to be another year of negative growth in the worldwide ad market, forecasting a 0-2% global decline. The US is forecast to fall by 1.5% and Europe by 2.0%, he told an analysts’ meeting. (see Havas Sees Worldwide Ad Decline Of 2% In 2002)

UK

Total advertising spend in the UK fell by 6.5% year on year in Q3 2001, down from £2.9 billion to £2.7 billion, according to data compiled by the Advertising Association in January. The AA forecasts that total display advertising will decline by 4.6% in 2001, with the majority of the fall felt by the television and radio industries. In 2002, a slight return to growth – 0.5% – is forecast, although this is still 4.2% down on 2000’s figures. Regional press shows the only positive growth of all the media this year, at 2.0% or £56 million higher than 2000. However, the industry is set to drop back again slightly in 2002, by 0.9%.

Revenue for the outdoor industry was down by 2.5% in 2001 but the medium is expected to rise out of the downturn with 4.2% growth in 2002, according to a recent report by outdoor buying company Blade (see UK Outdoor To Show Good Growth In 2002). Trading statements from GWR and Capital offered little in the way of optimism for the radio industry (see Trading Updates Offer Little Hope To Radio Industry). Forrester Research downgraded its European online retail spending forecasts in the light of European Commission cuts to consumption growth (see Forrester Downgrades European Net Retail Forecasts) and Forrester analyst Benjamin Ensor predicted that “Britain’s consumers need several more years of watching enhanced TV programmes, playing TV games and responding to broadcast ads before they get used to banking or applying for financial products through the TV”. Implying that return on investment from t-commerce is but a distant hope (see iTV Users To Reach 21 Million By 2004, But Users Not Ready For TV Banking, Says Forrester).