LONDON: WPP Group's consolidated media planning and buying operation GroupM is again in divination mode with its monthly This Year Next Year ad industry forecast - this time peering through the swirling mists of the UK.
Published today (Wednesday), TYNY-UK cautiously ventures out on a limb to rah-rah it for the British advertising economy. "Overall, 2007 feels like a getting better sort of year in media and marketing".
Which by Sir Martin Sorrell's standards amounts to Panglossian optimism.
In 2006, opines the report, the UK television ad market "was a pretty noxious mixture of fast-moving consumer goods budget cutting, money moving online [and] a general sense of slowdown".
TV ad revenues for that year were down by 4% overall, while in 2007 GroupM foresees a full-year decline of just 1% and a flatline through 2008.
Justifying their optimism, the seers explain: "A recurring theme in this report is that traditional media owners are getting better at being and selling multimedia 'hubs'.
"The best - Channel 4 and News International spring to mind - are setting examples to the whole industry."
However, reverting to Sorrell norms of caution, the report warns that the UK ad market overall is too reliant on continued growth from internet spending.
"Ultimately we still rely on internet for most of the growth and traditional media will underperform the economy long-term, unless it becomes more productive," it says.
"The internet's middle name is accountability. Traditional media can plug into this with a simple adaptor. Or it can regard it as a threat to be ignored."
But is this Klondyke-style growth sustainable?
"We put our head into the lion's mouth and say 'yes', though it is still growing very strongly," the report ventures.
It also predicts lower online growth of 34% in 2007 versus 48% in 2006, and 30% in 2008, and GroupM believes the decline curve will continue thereafter.
"Our slowdown rationale is the 'approach of satiation', of broadband installation and hours online. What you do online matters too: social networking is taking up more of the daily average hours online, and it's harder to advertise there."
In sum, says the report, the UK marketing and media market will . . .
- Post total revenues of £26 billion ($52.64bn; €38.39bn) in 2007 and £27bn in 2008 - respective annual increases of 2.6% and 3.1%.
- See demand for TV and print media stabilise after their 2006 nosedive.
- Witness substantial hidden growth in unmeasured marketing services - such as events marketing, public relations and sponsorship.
"Multiplatform media sales are getting more professional, at least up at the quality end," it says. "There is an argument that the worst of the internet storm has passed for the quals [quality newspaper sector].
"This is a bit chicken-and-egg: the quals have generally managed their internet brands well, which means making them accessible to the widest possible audience. From a commercial standpoint, News International is leading this with The Times, while the Telegraph and Guardian Online lead on editorial execution."
Data sourced from multiple origins; additional content by WARC staff