INSIGHTanalysis: Media Healthcheck – March 2004
In March the UK advertising expenditure results were released. These beat all expectations and encouraged global advertisers to revisit 2004 forecasts.
Looking Forward In 2004
AA and WARC announced that they expect UK advertising expenditure to rise by 3.2% this year. All media sectors are expected to grow, but the highest annual percentage change of 7.0% is expected for the outdoor advertising sector, followed by 6.1% for radio and 3.9% for consumer magazines. Internet is expected to be the single fastest growing medium, although this is not be covered by the AA’s advertising forecast until next quarter.
Interdeco’s Ad Barometer report reflected similar sentiments by saying ‘the worldwide advertising market recovery is underway for good.’ The market turnaround has forced advertising researchers at Interdeco to revise their previous forecasts upwards. In October 2003, Interdeco said the global market would grow by 3.2% in 2004, but this has now been revised to 4.0%. Assessment of the world ad market in 2003 has also been revisited and growth expectations have increased to 1.9% from 1.7% in October.
Merrill Lynch on the other hand were less enthused by the future of the advertising market although they couldn’t deny things are definitely improving. They said of the US market: “Advertising market trends are looking up and should continue to be positive for 2004 but we cannot see anything to get excited about.” The poor quarter one 2004 results in the US radio sector meant Merrill Lynch analysts had to go back to their crystal ball and revise the 2004 forecast down to 6% from 8%.
UK Radio Results
Capital Radio revenues are expected to increase by 3% year on year, according to its first half trading statement issued in March. Capital Radio believes that after an unsettled period, advertisers’ confidence has returned. A spokeswoman said: “There is a lot of demand from advertisers, their confidence is definitely returning and we are actually having to turn some away because there are just not enough slots on 95.8 Capital FM.”
However, Capital Radio’s growth pales in comparison to Scottish Radio Holdings (SRH) which also issued its first half trading update in March.
SRH saw an encouraging growth in first half of the year with a rise of 12% in radio revenues and 8% in press revenues. Trading for the first six months, ending on 31 March 2004, shows that radio and press revenues are estimated to be 14% ahead of last year, including acquisitions.
The SRH board considers the company to be in a strong position to continue to develop. SRH said: “The first six months are encouraging and have shown good performances but it is still too early for the group to forecast how the full year will turn out.”
The Wireless Group says it has also had a good start to 2004. TWG has turned corners to reach a £2.3 million adjusted operating profit in 2003. This is up £4.6 million from 2002, when losses were £2.3 million. Kelvin MacKenzie, chairman said: “This is a good start for the year in which we see a lot of sport activity and opportunity. Improving markets does not mean we have taken our eye off costs, which are rigorously controlled.”
Emap’s radio airtime revenue from analogue and digital stations is showing strong growth of 7%. This is largely driven by the national advertising market towards the end of 2003. Overall revenues at Emap are expected to rise by 9% and the group says that it is confident of delivering results in line with expectations.
The Technology, Media and Telecommunications (TMT) FTSE shares index fell by 6.5% during March 2004 as shown.
