Merrill Lynch Sees ‘Cautious Optimism’ For 2003 US Ad Outlook

It is forecasting a 4.0% growth for the US and 3.0% growth globally this year, falling pretty much in the middle of forecasts from Zenith Media (see World Advertising Forecasts From Zenith Optimedia) and Universal McCann (see Universal McCann Expert Upbeat On Ad Prospects). Merrill notes that tough comparables, a shaky economy and the possibility of war with Iraq are all likely to influence advertising trends this year.

Newspaper advertising gained around 3.0% in November, after a 3.5% growth in October, but the small drop in growth was largely due to a late Thanksgiving which pushed the holiday buying season into December and cut it short by around six days. December is expected to show decent growth, but without any real pick-up momentum, say analysts.

Television and radio, meanwhile, are remaining strong. Radio sales forecasts for Q4 and FY 2002 have been raised from 10.0% and 5.7% respectively to 11.0% and 5.9%. For 2003, the forecast has been nudged up from 5.2% to 5.3%. Radio sector market share gains are anticipated for the course of the year, largely at the expense of the newspaper sector, says Merrill.

Ad creation picking up…? Merrill Lynch also reports that there is anecdotal evidence from a couple of agencies of a pick-up in activity and that existing clients are starting to produce more adverts. The timing of this pick-up in activity is on target with the typical lag between improvements at media owners, which benefit earlier, and at ad agencies, which are later into the upswing.

The latest set of forecasts is shown here.

US Advertising Growth Forecasts
	2001	2002F	2003F
Total US	-6.3	0.7	4.0
US exc. Direct mail	-7.8	0.5	4.1
Newspapers	-9.4	-0.7	4.0
Broadcast	-13.2	4.7	3.3
TV Networks	-10.0	4.0	6.0
TV Stations	-16.8	7.1	1.1
Cable	0.5	-0.2	6.1
Radio	-7.5	5.9	5.3
Magazines	-7.5	-3.5	4.0
Internet	-11.6	-10.0	5.0
Total non-US	-3.3	-2.5	2.1
Global	-5.3	-1.1	3.0
Source: Merrill Lynch, January 2003