Throughout June, the progress of the advertising recovery was closely monitored and scrutinised by market analysts and advertising chief executives alike, with each having their own view point on how things are shaping up.
A study from the
Chartered Institute of Marketing said that confidence among Britain’s marketers had reached one of its highest levels, with those in the business certain the recession had finally come to end. The report went on to say that UK marketers are now planning to invest to make the most of the recovery and marketing spend is predicted to increase by the largest margin ever recorded in the history of the study.
This sentiment was also echoed by the US Association of National Advertisers who said that nearly half of US advertisers expect their budgets to increase in the next year, with US magazines set to benefit the most from the budget hike.
On an uncharacteristically optimistic note, Sir Martin Sorrell, chief executive of WPP, suggested that the outlook for advertisers is ‘good’ and ‘getting even better’.
He said: “Advancing Americanisation and the growth of Asia Pacific, over-capacity and the shortage of human capital, the web, the demand for internal communications and retail concentration should together underline and assure the importance of our industry and its constituent parts, advertising and marketing services.”
However, in a thought provoking report from Mike Yershon, chief executive of Yershon Media Assessment, for the Financial Times, he said that closer analysis of the advertising figures reveals that the recovery may not yet be here.
Based on the figures released by the Advertising Association, advertising spend rose by 3.5% during the first quarter of this year, however when this is compared to growth rates in other sectors of the economy, advertising has been lagging behind. In fact, advertising has actually fallen and not risen when calculated as percentage of GDP.
Throughout the early 1990s, the advertising industry’s share of GDP had been rising steadily but between 1998 and 2003 advertising revenue fell behind when it grew by only 19.5%, compared with UK GDP which was up 28%.
Forecasts Revised
Many market watchers returned to their crystal balls throughout June, as the recovery takes hold and knocks things out of their usual sequence.
The latest report from Merrill Lynch says that advertising is finally back on track and as a result the group has revised its global advertising forecast for 2004 upwards to 5.5% and for the first time in several years, the regional forecasts for US and overseas have been aligned with GDP at 6.3% and 4.6% respectively.
As political spending continues to fuel US advertising spending, Universal McCann’s director of forecasting, Bob Coen, says he now expects a 7.3% increase in US advertising spending this year, while 2005 is predicted to grow by 6.5%.
For the second time in one month, Merrill Lynch, has revised downward its US national radio industry growth forecasts to 3.8% from 5.6%. The analyst making the downward revised prediction, described this as ‘death by a thousand cuts.’
