The media industry can expect to see no let up in the advertising downturn with the situation likely to get worse before it gets better. That is the disheartening conclusion to be drawn from research by WestLB Panmure as reported by The Guardian.
The investment bank cited the prospect of conflict in the Middle East and signs of a “double dip” recession in the US as reasons for pessimism. Merrill Lynch analyst Lauren Rich Fine has already warned that advertising forecasts for 2003 could be over-optimistic given the current political and economic climate (see
US Advertisers Hold Fire As Difficult Conditions Prevail).
WestLB goes as far as to predict a 1% fall in global adspend next year and echoes the sentiments of WPP supremo, Sir Martin Sorrell in stating that a full revival will not be possible until 2004 (see Ad Recession: Worst Is Over, Conference Told).
“While we have seen a tentative upswing in US advertising in the last two quarters, Europe has worsened and the current economic and political uncertainty is likely to dampen the flickering US recovery in the fourth quarter,” said West LB.
A recession in the US would have serious implications in the UK and there is a specific warning for ITV companies who rely heavily on advertising from American companies. WestLB analysts already foresee a drop in revenues at Carlton and Granada and are predicting that the ITV advertising market could fall 1% in 2003.
Despite the gloomy picture currently being painted by media observers, there is renewed confidence about the long term prospects for advertising. New growth forecasts from the Advertising Association show that the industry can expect revenues to increase by up to 45% in the next ten years (see AA’s Long Term UK Ad Forecasts Warn Against Pessimism).
