Merrill Lynch has lowered its US and global advertising forecast as a result of increased pressures and competition faced by the US radio industry.
US advertising is now expected to grow by 6.3% in 2004 and 5.1% in 2005, down from 6.5% and 5.2% previously. The global advertising forecast has also been lowered, this is now expected to grow by 5.4% and 4.8% in 2004 and 2005, compared to previous predictions of 5.5% and 4.9%.
Overall, the US radio industry has been hardest hit as a result of fragmenting audiences that have becoming increasingly difficult to reach, which in turn has weakened demand from advertisers.
The forecast for this year’s US radio spot advertising has been lowered to 1.6% from 3.5% and in 2005, from 5.0% to 3.0%. This has also had a knock on effect for Merill Lynch’s 10-year radio revenue growth forecast, which has been lowered to 5% from 4%.
For the newspaper industry, Merrill Lynch is maintaining its growth forecast of 5% in 2004 and 5% in 2005, although the advisory group has admitted it is worried that its 2005 estimate might prove optimistic.
Last month, ZenithOptimedia, revised upwards its global advertising spending forecast for this year from 4.2% to 6.2% as worldwide advertising confidence holds despite oil and consumer uncertainties (see Zenith Predicts Ad Market To Grow By 6.2% In 2004).
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