Media Planning Group 2002 Forecasts By Medium

Advertising growth MPG’s forecasts for advertising are more pessimistic than both Zenith Media’s (which are particularly upbeat) and those of analysts at ABN Amro. Zenith Media has 2001 UK adspend down by 4.0% and 2002 showing a 0.7% growth. ABN Amro, meanwhile, reckons 2001 will be down 6.1%, with 2002 down by 1.1% (see Forecasts).

UK advertising growth forecasts comparisons
	2001	2002
Zenith Media	-4.0	0.7
Media Planning Group	-7.6	-1.0
ABN Amro	-6.1	-1.1
Average	-5.9	-0.5
Source: As above, compiled by MediaTel Insight, 12/01

MPG’s forecasts by medium, in terms of adspend and year on year growth, are shown here.

Advertising revenue at current prices (£m)
	2000A	2001F	2002F
Television	3,308	2,931	2,866
Press	5,983	5,500	5,400
Radio	456	472	500
Outdoor	615	652	675
Cinema	118	127	140
TOTAL	10,480	9,682	9,581
Source: Media Planning Group, 11/01

Advertising growth at current prices (%)
	2000A	2001F	2002F
Television	7.3	-11.4	-2.2
Press	10.3	-8.0	-2.0
Radio	15.4	3.5	5.9
Outdoor	21.5	4.3	3.5
Cinema	9.3	7.6	10.2
TOTAL	10.1	-7.6	-1.0
Source: Media Planning Group, 11/01

Television Television costs per thousand (CPT) are expected to fall to around the same levels as 1998, as shown in the chart below. In 2001 they dropped by 10% when compared to 2000 as a result of the broader economic and advertising slowdown, initially from the dotcom slump and later exacerbated by the events of 11 September.

MPG is not anticipating any real recovery in demand for TV until Q4 2002 at the earliest, as a result of the poor economic outlook.

Television will continue to bear the brunt of the advertising downturn next year, with total revenue predicted to be down by 2.2% when compared to 2001, itself forecast to be 11.4% down on last year.

ITV’s revenue is forecast by MPG to be down by 4.2%, with slightly lower declines at Channel 4 and Channel 5. Sky, on the other hand, is performing strongly, with revenues expected to be up by 9.7% next year.

2002 television revenue forecasts
	Revenue (£m)	YoY % change
ITV	1,614.0	-4.2
Channel 4	576.0	-3.5
Channel 5	182.0	-2.8
Sky	283.0	9.7
Other	142.4	5.9
GMTV	57.9	-3.2
S4C	10.5	0.0
TOTAL	2,865.8	-2.2
Source: Media Planning Group, 11/01

National press Newspaper advertising revenues are not forecast to increase until Q4 2002 at the earliest, with 2002 expected to be broadly flat to slightly negative in terms of growth, following a predicted 8% fall this year. Advertising volumes have begun to fall from Q2 this year, particularly in the online, IT and finance sectors, says MPG.

A combination of increased pagination since 11 September and declining advertising volumes is set to hit newspaper publishers’ profits substantially. This is already becoming clear, particularly at US publishing groups (see Gannett Sees Swifter Ad Improvement As Attacks Hit Revenues).

Circulations picked up following the World Trade Centre attacks, but MPG predicts that this will not be a long-term trend and that 2002 will see a continuation of the overall decline in newspaper sales.

The national broadsheets are expected to show ad levels down 40% for classified and 10-20% for display. The popular titles will be less affected by classified revenue declines, with revenues more or less flat in 2002, but they are nevertheless showing greater circulation falls.

Consumer magazines A good start to the year – with an 8.6% rise in display in H1 – has since been dampened by the WTC attacks. Publishers have been reducing pagination in the latter part of the year in order to artificially restrict supply in an attempt to drive up advertiser demand.

Classified revenues are expected to be down around 5% this year and the next, whilst display will rise 3-4%. Overall, 2001 should show a 3.1% growth and 2002 a 1.9% growth.

Online Market rates for online advertising are at a six year low and are set to decline further next year, according to MPG. The report says that the levels of growth forecast by most research companies will not be realised in 2002.