Forecasters at ZenithOptimedia have downgraded their European advertising predictions, with hopes that real growth would emerge this year now all but gone.
ZenithOptimedia had previously forecast that the top-five European advertising nations would see a 1.8% rise in revenues in 2003 (see European Advertising Forecasts From Zenith Optimedia); it is now anticipating growth of just 0.4%. Forecasts for 2004 have been downgraded from 4.2% to 3.2%.
In the UK, growth is expected to be 1.1% in current prices this year, rising to 2.9% in 2004. In constant prices, this translates to -1.4% and 0.4% respectively.
The US figures, on the other hand, have been increased slightly in the latest quarterly release from ZenithOptimedia. The forecasts for 2003 US growth now stand at 2.2%, up from 1.9%.
| Advertising Spend Forecasts (US$m, current prices) | |||||
| 2001 | 2002 | 2003 | 2004 | 2005 | |
| US | 141,636 | 143,552 | 146,671 | 153,335 | 158,319 |
| Five-country Europe | 60,624 | 59,333 | 59,556 | 61,463 | 63,984 |
| within which: | |||||
| France | 10,532 | 10,281 | 10,416 | 10,707 | 11,027 |
| Germany | 20,146 | 19,323 | 19,147 | 19,819 | 20,910 |
| Italy | 8,349 | 8,053 | 8,098 | 8,337 | 8,634 |
| Spain | 5,710 | 5,787 | 5,828 | 6,062 | 6,339 |
| UK | 15,888 | 15,889 | 16,067 | 16,538 | 17,074 |
| Japan | 37,650 | 35,089 | 35,359 | 35,906 | 36,578 |
| Seven-country total | 239,910 | 237,974 | 241,586 | 250,705 | 258,882 |
| Source: ZenithOptimedia, April 2003 | |||||
| Advertising Growth Forecasts (%) | ||||||||
| 2002 | 2003 | 2004 | 2005 | |||||
| Current | Constant | Current | Constant | Current | Constant | Current | Constant | |
| US | 1.4 | -0.2 | 2.2 | 0.2 | 4.5 | 3.3 | 3.3 | 1.9 |
| Five-country Europe | -2.1 | -4.1 | 0.4 | -1.4 | 3.2 | 1.3 | 4.1 | 2.0 |
| within which: | ||||||||
| France | -2.4 | -4.2 | 1.3 | 0.0 | 2.8 | 1.5 | 3.0 | 1.5 |
| Germany | -4.1 | -5.4 | -0.9 | -2.0 | 3.5 | 1.9 | 5.5 | 3.6 |
| Italy | -3.5 | -5.8 | 0.6 | -1.1 | 3.0 | 1.3 | 3.6 | 1.9 |
| Spain | 1.4 | -2.2 | 0.7 | -2.2 | 4.0 | 1.0 | 4.6 | 1.5 |
| UK | 0.0 | -2.1 | 1.1 | -1.4 | 2.9 | 0.4 | 3.2 | 0.7 |
| Japan | -6.8 | -5.9 | 0.8 | 1.7 | 1.5 | 2.4 | 1.9 | 2.6 |
| Seven-country total | -0.8 | -2.1 | 1.5 | 0.0 | 3.8 | 2.7 | 3.3 | 2.1 |
| Source: ZenithOptimedia, April 2003 | ||||||||
No war effect (yet), but economy weak The group says that war has not yet damaged hopes of a recovery, although a prolonged war could have an adverse effect on advertisers’ confidence. Rather, the downgrades in Europe are the result of weaker than expected economic recovery in the region. Advertising recovery is currently lagging behind even this poor economic growth.
ZenithOptimedia cites analysis from HSBC, which recently said that “the unusual feature of the current global picture is not so much the depth of recession but rather the absence of decent recovery”. The bank predicts world economic growth at 2.2% this year and 2.8% in 2004; the 1995-2002 mean was 3.5%, says ZenithOptimedia.
Consumer demand growth is forecast at 2.2% and 2.4% (the historic mean is 3.5%). World advertising’s mean annual change 1995-2002 was 5.3%; it is known for its volatility relative to underlying economic trends.
“Since the ad recession of 2001/2 our forecasts portray advertising uncharacteristically becalmed. This essentially bearish view of advertising shadowing rather than running ahead of economic growth is reinforced by mounting evidence of the wider ‘absence of decent recovery’ in this very economic growth. Weak corporate confidence, and the expectation that it will remain so, is probably doing most to stunt advertiser sentiment,” says the report.
