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European industry will not see US and Asian growth yet

LONDON - The European advertising industry will not witness the same speed of recovery as the US or Asia in 2004 even though conditions are beginning to improve, according to a new report.

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The European Association of Communications Agencies has said that Europe remains the most difficult area while the US will drive recovery.

John Taylor, CEO of ZenithOptimedia and chairman of EACA's media agency council, said: "The proportion of advertising as a percentage of GDP is much higher than in the US. Europe will never reach the same growth rate -- European conditions mean slower economic recovery."

The news came amid predictions that the WPP Group is set to announce profits of over £450m this week, with chief executive Sir Martin Sorrell reported to be declaring an end to the long advertising recession.

However, others are more circumspect and say that that the focus should be on restoring margins rather than focusing on growth levels.

Christian de la Villehuchet, CEO of Euro RSCG Belgium, said: "2004 will bring back optimism for growth following a period of geopolitical and geophysical uncertainty, but advertisers still have one foot on the accelerator and the other on the brake. The thunderstorm has gone, the wind is dying down and the sun is peeping through 2004."

While the news for Europe was gloomy in terms of returning to growth, advertisers were praised for being more innovative.

Bernard Barnett, European vice-president at Young & Rubicam, said: "Europe differs from the US and Asia because clients are more ready to look beyond traditional advertising for their commercial communications."

EACA said that the only way for agencies to grow income is to offer a wider range of services and thus increase share of spend.

"Clients who want multiple services will increasingly go to the international networks who can offer integrated services at local level. Independent agencies will be more exposed as boutique agencies, although many will succeed as specialists or be used by advertisers as experimental agencies," Barnett said.

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