Recession to have five-year impact on Germany

27 November 2009

GÜTERSLOH: The impact of the recession on the German economy will last for at least another five years, Hartmut Ostrowski, chief executive of Bertelsmann, the media group, has predicted.

According to Warc's latest Consensus Forecast, adspend levels in Germany are comparatively stable at present, albeit still decreasing, while national consumer confidence levels have remained mixed as the financial climate fluctuates.

"Visibility for 2010 and 2011 is low," Ostrowski further argued. "Even if growth rates return to a stable 1% or 2% annually, GDP will not return to the level of 2008 before 2015."

Bertelsmann's major assets include Gruner + Jahr, the publishing specialist, and RTL Group, the television company, which houses channels including Five, which is broadcast in the UK.

Its total revenues fell by 6.3% over the period from January to September, and the Gütersloh-based firm has warned that the pace of this contraction would remain fairly constant over the final quarter.

Despite this, Ostrowski said these totals were "much better than the revenue decline we were expecting at the beginning of the year," and also forecast there would a "small year-end rally" in the ad market.

Looking forward, he further suggested "there are a few good signs but it's too early to conclude that we've made it through the worst."

More broadly, Ostrowski said the financial crisis was not the only contributor to the drop off in advertising expenditure for traditional media, as substantial structural shifts, such as the growth of the internet, had previously caused this trend to begin.

While Bertelsmann's ceo questioned whether it would be viable to charge consumers to view material on the web in an effort to offset this development, he added there is still a need "to try to establish paid-content models again and again."

Data sourced from Reuters/Wall Street Journal; additional content by Warc staff