WPP Group’s relatively weak results for the third quarter of 2004 are signalling some doubts about the recovery of the US advertising marketplace.
In a statement issued to shareholders this morning, WPP voiced concerns about the prospects for the United States economy in the aftermath of the presidential election, with its fiscal deficit, weak dollar and rising commodity prices, claiming that the ‘jury remains out on 2005’.
WPP believes industry growth rates for year-end 2004 will fall between 3-4%, while just 2-3% is likely to be recorded for 2005 advertising revenue growth.
This is a far more conservative view of the 2005 US and global advertising economies than portrayed by others forecasters such as Carat, Universal McCann and ZenithOptimedia.
WPP’s view echoes that of the media commmentary group Jack Myers, which last month revised upwards its 2004 and 2005 advertising spending growth forecasts, to 6.8% and 2.2% respectively. Jack Myers warned, however, that ‘although most forecasters are reasonably bullish, there are early warning signs on the horizon to suggest that the 2.2% growth forecast for 2005 may prove to be overly optimistic’.
| LATEST US ADVERTISING GROWTH FORECASTS |
| |
|
|
|
| |
Growth (%) |
| |
2003 |
2004 |
2005 |
| Merrill Lynch (08/04) |
3.8 |
6.5 |
5.2 |
| Universal McCann (06/04) |
3.6 |
7.3 |
6.5 |
| ZenithOptimedia (04/04) |
1.9 |
5.5 |
3.9 |
| Jack Myers (09/04) |
2.8 |
6.3 |
2.2 |
| Interdeco/Ad Barometer (03/04) |
3.1 |
4.9 |
– |
| Carat (09/04) |
_ |
5.8 |
4.8 |
| Average |
3.0 |
6.0 |
4.5 |
| Source: As above/compiled by MediaTel INSIGHT |
