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Advertising upturn to arrive in 2003 but it will be slow

LONDON - Global advertising spend is set to rise next year, signalling the start of an upturn, but it will be slow progress, with the US leading Europe.

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Adspend will rise 2.9% in 2003 according to the Zenith Optimedia Group, bringing to an end a two-year downturn in the market.

As earlier reports have signalled, the signs of recovery are being led by an upturn in TV airtime sales. ABC, CBS, Fox and NBC have all reported better-than-expected revenues and prices for airtime are starting to climb.

Newspapers and magazines are lagging behind TV and it may not be until the second half of 2003, leading into 2004, than print media starts to show similar kinds of recovery.

Previously, many analysts and market watchers, WPP Group's Sir Martin Sorrell and Zenith Optimedia included, have flagged 2004 as the time that real signs of recovery will be seen when the US market, in particular, will be boosted by presidential elections and the Olympics.

Zenith is saying that we are now at the bottom of the trough and the climb out will be a slow one, with no promise of a rapid recovery.

Jonathan Barnard, knowledge-management manager at Zenith Optimedia, said: "We're at the bottom now and the only way from here is up. I don't think it's going to be an amazing rapid recovery. We've got a long, hard slog ahead of us."

However, Zenith's outlook has improved since its last forecast was published. It is now saying that it expects 2002 to match last year. It had said it expected a further decline of 0.5%, adding to last year's 3.8% fall. In its April forecast, Zenith said that there will be no sign of an upturn until the fourth quarter. Its outlook then was going against other forecasts, which had painted a brighter picture, with advertising picking up in the second half of 2002.

Zenith also raised its reckoning for global adspend in 2003 to £203.3bn from £197.5bn. Next year still looks better, but on the back of revised figures for 2002 its forecast for 2003 has been scaled back accordingly.

Zenith said that it now expects adspend in the US to grow by 1.3% in 2002, compared with its original 0.1% fall calculated earlier this year. The rise has come on the back of heavier adspend in US by politicians as Americans voted in the congressional elections. Zenith had previously pegged election adspend to come in at around £443.7m, when it actually hit £630m.

However, Europe, unlike the US, is still expected to witness a fall in overall adspend in 2002.

Zenith has cut back estimates and expects adspend in Europe to fall 1.1% this year. This is a rise on its earlier forecast of a fall of 0.7%. In 2003, it expects a rise of 2.5% and, again, this is down on an earlier 2.8% increase. The UK remains the strongest market in Europe and Zenith only expects it to fall 0.9% this year.

In 2003, the UK will be one of the stronger European ad markets and is expected to show growth of 2.1%, compared with just 1% in Germany and 1.6% in France. Spain is expected to show the same growth as the UK, and Italy is forecast to come in strongest at 2.8%.

On the issue of war in the Gulf, Zenith noted that the 1990/91 Gulf War lasted nine months and coincided with global recession and that it simply made a poor situation worse. However, last time much of the ad revenue lost through travel and oil returned to the market later.

"It would take a much more protracted and damaging conflict to do measurable damage to the advertising economy. Although many of our local agencies identified war as a downside risk, it has so far made no impression on their numbers," Zenith said.

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