WPP’s media buying subsidiary Group M churned out yet another forecast for advertising growth today. (On top of the existing ones from Zenithoptimedia, Billets and Enders.)
This being WPP, the tone is less doom-laden than Enders. But it seems more gloomy than Zenithoptimedia and Billets.
TV advertising: -6%
Radio ads: -8%
Consumer magazines: -8.5%
National newspaper advertising: -12%
Regional press: down 13%
B2B magazines: -14%
With one or two exceptions, which we’ll come to in a minute, Group M is broadly predicting that 2009 will see ad revenue declines that resemble those of 2008. Here’s what they’re predicting for this year:
TV advertising: -5.8%
Radio ads: -9%
Consumer magazines: -7.6%
National newspaper advertising: -8.6%
Regional press: -19.1%
B2B magazines: -8%
Traditionally, forecasters have used GDP growth figures to predict growth and decline in ad spend.
I suspect Group M is doing exactly this. The assumption behind Group M’s numbers for 2009 is fairly obvious: they’re clearly betting on a nice, sharp, recovery in GDP during 2H09. With a little help from easier YOY comparisons, of course.
That’s why regional press gets allocated a smaller decline next year than in 2008. The sector was first into recession, so it will be first out. Similarly, Group M is expecting revenue declines to deepen next year at the nationals, who lag behind regionals in the business cycle.
I can buy the bit of Group M’s logic that deals with timing. What I can’t buy is that assumption about a quick economic recovery in 2H09.
Every commentator in town laughed at Alastair Darling’s rosy predictions of recovery in the pre-budget statement a few weeks ago.
But even Darling predicted GDP decline of 0.8% during 2008 — and a performance that will almost certainly be worse in 2009 (down by 0.75%-1.25%).
Presumably, Group M has pegged its expectations for GDP next year somewhere near to Darling’s most optimistic dreams for 2009 (ie: down by 0.75%).
I don’t buy this deliriously contented scenario. Nor, I suspect, will publishers – particularly not those who encounter this bit of ancillary smugness, flogged to Media Week by Group M:
Despite this, GroupM does not expect to see mass closures within the 1,300 free and paid-for regional titles, as publisher margins have not collapsed. The report predicts closures might be confined to the weakest 2%, or some 26 newspapers.
Margins haven’t collapsed? Perhaps not entirely. But try telling that to the several hundred regional journalists who have lost their jobs since July.
As for a suggested total cull of 26 local newspapers, perhaps Group M might care to consult with the NUJ, which reported on Monday that more than 30 local newspaper offices and ’50-plus titles’have been closed since June.
Sure, the NUJ’s figures might include a bit of puffery. But less than six months into recession, they still make Group M’s prediction look absurd.
As for the question posed in the headline, the answer should be obvious by now. If nothing else, forecasts like these from the big agencies look uncomfortably like a licence to continue battering down yields toward extinction.
One way or another, this generates short-term profits for agencies.
In the background, behind the deliriously happy forecasters, you can just about make out a bunch of ad buyers clutching copies of Group M’s report.
Standing above the prisoner on the rack, they’re murmuring in unison: “Oh, come on — it’s not really hurting that much, is it?”