Zenith gloomy on advertising upturn as spending falls

Zenith Optimedia, the leading media group, yesterday predicted some improvement in the global advertising market but gave little cause for cheer for UK advertisers.

Zenith Optimedia, the leading media group, yesterday predicted some improvement in the global advertising market but gave little cause for cheer for UK advertisers.

At constant prices, Zenith forecast a 1.3 per cent rise in global advertising expenditure in 2003, a small improvement on its previous quarterly forecast of 1 per cent, and a 3.4 per cent increase in 2004.

This contrasts starkly with the picture Zenith paints for the UK. The UK market is forecast to contract by 2.4 per cent in real terms in 2003 and rise by just 0.8 per cent in 2004. The percentage increase for the UK in 2004 is the lowest of any region included in the quarterly report. It spells bad news for British media companies, who are banking on imminent recovery from a three-year downturn in advertising revenues.

The forecasts for the rest of Europe also show contractions in 2003 in all the major countries except Germany, but for 2004 it sees overall growth in real terms of 2.2 per cent.

The situation in the US, which typically leads advertising recoveries in other regions by at least six months, is altogether brighter. The report foresees a 1 per cent rise in the US in 2003 followed by a healthy 3.7 per cent improvement in 2004. The report, which includes advertising across all major media, follows a similarly cautious forecast last week from Europe's largest media-buyer, Aegis. Its chief executive, Doug Flynn, dampened hopes of an event-driven upturn in Europe and said that he expected only "slow progress" over the next 18 months.

The report from Zenith coincides with news from the Advertising Association of a fall, in real terms, in UK advertising expenditure in the second quarter of 2003. The AA said ad expenditure in the UK totalled £3.49bn in the period, a 1.8 per cent drop at constant prices from the previous year.