The media industry has just been through the worst advertising downturn for 50 years, according to analysts at ABN Amro, with no rebound expected until 2004.
The global prognosis, from Mike Hilton and his media team at the Dutch bank, was markedly more gloomy than other major industry studies.
"In 2002, we expect advertising to decline for a second year running, with a decline of 1.4 per cent globally.... In 2003, we expect another below-trend year before the market returns to normal [5 per cent] growth rates," ABN said.
UK media shares rallied from the end of last year as the market priced in a strong recovery later in 2002. ABN suggested not only that this would not occur but added that "we do not anticipate a strong V-shaped recovery in 2003. Rather, advertising will be 'early-in, late-out' of recession".
A number of companies, such as Granada, have recently argued that media is 'early-in, early-out' of a recession, pointing to a recovery ahead of the rest of the economy.
For 2002 in the UK, ABN predicted overall advertising revenue falling 1.7 per cent. This contrasted with the two benchmark industry forecasts – Zenith has UK advertising growing 0.7 per cent this year while McCann-Erickson sees a 2.5 per cent uplift.
Globally, ABN predicted a 1.4 per cent decline in 2002, while Zenith had gone for a 0.8 per cent increase and McCann-Erickson for growth of 2.2 per cent.
"We view Zenith's numbers as overly optimistic, particularly for Europe, and McCann-Erickson's estimates are generally too high," ABN said.
On a slightly more positive note, ABN said that Jack Myers, a respected independent media consultant in the US, had gone too far with the bear case. He has advertising falling 7.4 per cent this year – worse than 2001 – with growth of just 0.9 per cent in 2003 and 3 per cent expansion in 2004.
ABN said that 2001 was the worse year for advertising for 50 years on a global basis because revenues were thought to have fallen 5.7 per cent.
Adam Smith, of Zenith, said that Asia had bailed out the West in the early 1990s, whereas this time, the Far East was economically weak too. However, he said that for the UK, the last recession was more severe. At constant prices, advertising sales fell 10 per cent in the UK in 1991, he said, compared with a 6 per cent decline last year.Reuse content