UK flag US flag FR flag BE flag
|

Monthly Ad Revenue Update: Climate To Remain Chilly For Advertising In Coming Months

Monthly Ad Revenue Update: Climate To Remain Chilly For Advertising In Coming Months

The coincidence of a slowdown in the US economy and the fall-out from the dotcom marketing boom that occurred at this time last year is forcing media groups to tighten their belts and warn investors of slackening revenues. Advertisers are being cautiously prudent with their budgets in fear that economic conditions in the States might make their way over to Europe and media owners are starting to feel the chill.

Agencies and strategic marketing specialists are doing rather well out of this climate as advertisers turn to them for advice on how to make the most of their advertising pound. As a result agencies like Tempus, Aegis and Cordiant have all recently posted strong figures and positive outlooks for the coming year. A number of media owners on the other hand, particularly in the television and radio sectors, are bracing themselves for a tough year.

TV and radio companies did well out of the dotcom marketing spend of 2000 and so year on year comparisons are always going to look gloomy. At the beginning of the year Capital Radio was one of the first of a number of radio groups to indicate a tough period, announcing that first quarter airtime revenues were likely to grow by just 4%. At the time the Advertising Association (AA) was predicting an 11.2% revenue growth for the UK radio industry as a whole during 2001. SMG last week said revenues at its Virgin Radio were flat in the first quarter. Analysts at ABN Amro said that this was disappointing and, given that comparisons are likely to get tougher in the second quarter, does not expect the station to achieve the predicted 9% growth for the year. Revenues at SMG’s two ITV franchises were down 9%.

Scottish Radio recently reported that national ad revenue was down by 9%, whilst local grew by 2% in the six months to April. Chrysalis and EMAP meanwhile, seem more positive. Chrysalis’ Galaxy stations showed ad growth of 41% in the five months to February and EMAP says that airtime sales are growing in excess of the general market.

In March, the AA downgraded many of its revenue growth forecasts. Radio dropped from 11.2% to 9.5%; TV fell from just 2.7% to 2.0% and outdoor was taken down from 9.5% to 7.8%. National newspapers and business magazines, on the other hand, were upgraded. Zenith Media has just said that it expects the US ad market to show the first decline in real terms for ten years. The forecast for the UK has been reduced from 4.3% to 3.6% or 1.3% growth in real terms.

Media Jobs