UK advertising to rise 1.1% in 2004: Zenith Optimedia

LONDON: Influential media forecaster Zenith Optimedia has hinted a slight 1.1 per cent increase in the UK's advertising revenues in 2004, bringing to an end one of the worst recessions the industry has seen. The company predicts US TV advertising will grow by 2.9 per cent after unexpectedly strong demand at the latest "upfronts".

But, the report adds that recovery will be much slower than elsewhere in the world, with global growth predicted to reach three per cent this year compared with just 0.4 per cent in the UK.

A mediaguardian report says that the UK advertising market is shrinking faster than any of the other big five economies with "no prospect" of a recovery in the ailing television market.

The report adds that the media giant issued a stark warning to the UK government in its latest report, saying the UK will miss out on any imminent recovery because of slowing consumer demand caused by high taxes and sluggish economic growth.

"Unlike the United States' 'jobless recovery', the UK, seemingly determined to emulate the slow-mo eurozone model, is condemning itself to sluggish economic growth by creating too many unproductive public-sector jobs financed by excessive taxation," the Zenith Optimedia report says.

"Consumer spending power is therefore eroding, and consumer demand is consequently expected to slow from 2.8 per cent growth this year to 1.3 per cent next. The UK ad market is shrinking fastest of the big five, and will be a slow grower in 2004."

"The TV market is notably uninfected by the upfront enthusiasm in the US - having endured the worst share loss of any medium since 1999, with no prospect of restoring its real revenue within this forecast period," said the report.

Worldwide growth is being driven by the US, where Zenith sees signs of an upturn in magazine and television advertising.

But it warned this would not be enough to "propel the US ad market single-handedly", and said it did not point to a strengthening of TV advertising in Europe.

"Even if the whole $9bn does get spent (a good part is cancellable), it is still only six per cent of US media. And we do not know how much of it is new money as opposed to a redistribution of budgets between the many species of American TV airtime," the report said.

"A hot upfront is a symptom of the growing scarcity of big audiences particular to the USA. No other large country has, or has in near prospect, such imbalanced demand and supply. On the contrary, TV pricing in western Europe remains soft." Zenith said both the outbreak of SARS and the war in Iraq had dented global ad revenues earlier this year.

But it pointed out that the only countries to have suffered sharp downturns were those directly affected, including Hong Kong, Singapore, Taiwan and Saudi Arabia.

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