Publicis Groupe-owned ZenithOptimedia has revised downwards its UK advertising expenditure forecasts for 2005, citing worries over the health of the economy as well as a ‘signicant fall-off in advertiser demand’ in the second quarter of this year.
The agency has cut its predictions for UK advertising growth from the 4.9% forecast in April, to just 2.9%; a direct response to the sharp downturn in advertising spending that began after Easter. Antony Young, chief executice of ZenithOptimedia UK has commented: “I think consumer spending is softer and house prices are as well, and that’s had some effect. The underlying shift has made us just a little more conservative for the subsequent years.”
Zenith’s estimates for the years ahead have also been lowered, with advertising growth in 2006 scaled down from 4.5% to 4%. Likewise, 2007 should see growth of 3.8%, down from the 4.4% previously predicted.
Advertising growth for individual media is expected to be relatively subdued in 2005, with forecasts for all but the internet being revised downwards. Revisions were particularly dramatic for television, down from the 5.2% expected in April, to just 1.5%. Although 2005 was expected to be difficult for television, due to the unfavourable comparisons with the general election and football’s European championship in 2004, Zenith said the 6% drop in television adspend during the second quarter was sharper than anticipated.
Forecasts have also been lowered from 3.8% to 1.3% for newspapers and from 2.4% to 1% for magazines. Radio is now expected to experience a decline in adspend of -1.1%, compared to the 3.9% increase predicted back in April.
Online is the only medium to come out of Zenith’s revisions positively. It is now expected to grow by 28.9%, up from just 18.7% estimated in its previous forecast, to take a 5% share of all advertising spend.
These revised forecasts are not entirely surprising, coming just days after Universal McCann downgraded its projection for 2005. Total US adspend is now expected to be up by 5.7% year on year in 2005, reaching $278.7 billion, down from its previous estimate of 6.4% released in December 2004(see McCann Revises 2005 Adspend Estimates).
Universal McCann’s revision followed a series of similar cuts by other leading forecasters including Merrill Lynch and TNS Media Intelligence.
With all these downward revisions in mind, the Advertising Association’s May prediction of a 5% growth in UK advertising spend (see UK Adspend Forecast To Rise 5% In 2005) for 2005 now appears overly optimistic.
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