INSIGHTanalysis: UK Media And Advertising Outlook
Aside from a blip caused by war uncertainty in March this year, UK advertising has shown year on year growth in every single month since May 2002, according to data from Nielsen Media Research.
March 2003 was the only month in the last twelve to show a year on year decline, falling by 1.2%. This can be attributed to a combination of the uncertainty in the run-up to war in Iraq and the fact that Easter fell in March last year, but in April this year.
Nielsen says that total media expenditure grew by £300 million in the year to April and that this will be “widely interpreted as a sure sign that a recovery in media has begun.” This assessment seems to fly in the face of much recent commentary which has claimed that conditions remain weak, with real recovery not expected until 2004 (see INSIGHTanalysis: Media Healthcheck – May 2003).
Perhaps the reason for this apparent contradiction is that growth has been far from consistent. Press revenues, especially in business to business publishing, have remained weak. Radio was in decline for the majority of last year and what overall growth there has been, is not particularly strong given that it is compared to an extremely weak 2001.
As a result, most observers are still reluctant to sound a recovery, expecting instead that things will show more substantial strength into 2004. Television, for example, is understood to be set for a very lacklustre summer, with ITV’s revenues expected by Lehman Brothers to be down by 8.9% in Q3, after a 4.7% decline in Q2 (see ITV Advertising And Merger Outlook From Lehman Brothers).
Merrill Lynch is forecasting that ITV1 revenue will fall by 20% in June (World Cup comparisons last year) and by 10% in July (see Merrill Lynch Cuts ITV 2003 Airtime Revenue Forecasts). In a full-year market up by only 0.6%, ITV1 is expected to fall by 4.0%. Lehman says ITV will be down by 2.0% in the full year, returning to more solid growth in 2004.
Merrill also believes that the regional press sector, so far resilient in the face of the downturn, now faces a very negative outlook, as economic and consumer spend conditions look set to weaken (see Conditions ‘Overwhelmingly Negative’ For UK Regional Press).
Figures published by the Advertising Association show that all advertising was more or less flat in 2002, with growth of 0.8% for the full year. Excluding the below-the-line contribution from direct mail, growth remained negative in 2002, at -0.3%, as shown in the charts here.
| UK Adspend Growth Trends, Current Prices YoY Change | |||||
| Q1 | Q2 | Q3 | Q4 | FY 2002 | |
| National Newspapers | -17.4 | -6.5 | -1.6 | 3.1 | -6.4 |
| Regional Newspapers | 0.7 | -0.3 | 2.0 | 2.8 | 1.3 |
| Consumer Magazines | -2.1 | -0.5 | 1.9 | 3.6 | 0.8 |
| Business Magazines | -21.5 | -5.6 | -6.0 | -5.0 | -9.4 |
| Total Press | -9.3 | – | -0.5 | 1.6 | – |
| Television | -6.8 | 5.4 | 9.3 | 9.8 | 4.3 |
| Radio | -0.7 | 0.1 | 0.7 | 3.1 | 0.8 |
| Outdoor | -10.8 | -2.1 | 5.1 | 15.5 | 1.9 |
| Direct Mail | 5.8 | 9.7 | 8.6 | 3.9 | 6.7 |
| Total with direct mail | -6.0 | 1.1 | 3.6 | 4.9 | 0.8 |
| Total exc. direct mail | -0.3 | ||||
| Source: Advertising Association, compiled by MediaTelINSIGHT | |||||
Nielsen says that “if the growth can be sustained between now and the annual negotiations in October, the media industry looks set to be in a healthy position come 2004.” However, given the expected poor summer trading in television and a weakening outlook for regional papers, the rest of the year may not be overwhelmingly strong.
On the plus side, radio has just reported record revenues for the first quarter (see Commercial Radio Sees Highest Ever First Quarter Adspend) and outdoor advertising jumped by 16.9% in the same period (see UK Outdoor Revenues Jump 17% In First Quarter).