The devil take the hindmost: but will “dozens” of major media brands really perish?

Roy Greenslade highlights this from Adam Smith, futures director at WPP-owned media agency Group M, as a potential quote of the year:

“No previous ad recession has put household media names at risk like this one has, from local newspapers to high-street magazines to national TV channels”.

Separately, Mark Sweney at the Guardian paraphrases Smith to suggest that ‘dozens of magazines and newspapers that are household names’face a ‘lethal threat”.

Dozens of household names? I wonder. The key words here, of course, ‘at risk”. In part, your perception of risk depends on your context. Certainly, the context surrounding WPP — parent company of Group M — has deteriorated lately.

Whatever the reason, Group M’s market forecasts have also deteriorated rapidly. In December, the agency was predicting that UK media investment (a posh expression for advertising) would decline by 5% during 2009. By March, this had been revised downward to -10%. Last week’s forecast was for a -14% decline.

Earlier this year, I criticised media agencies for their habit of talking up the ad market with unrealistic forecasts. So emphatically has Group M caught up with the real world that I’m starting to wonder whether the agency is erring on the side of bearishness.

In any event, as we approach the year’s mid-point, here’s what Group M is predicting for advertising in various media:

2009:

B2B magazines: -15%
Consumer magazines: -20%
‘Internet'(sic): 0.0%
National newspapers: -18.6%
Regional newspapers: -31.9%
TV: -14%
Radio: -14.9%

2010:

B2B magazines: -10%
Consumer magazines: -9%
‘Internet'(sic): +0.3%
National newspapers: -8.7%
Regional newspapers: +1.1%
TV: -3.1%
Radio: -9%

These figures are pretty grim. In advertising terms, Group M — a vast agency network that claims to handle 17.5% of world’s advertising — knows that of which it speaks. Its corporate parent WPP, noted steeper YOY percentage ad declines across its business in April than during Q1. In his report, Smith suggests that advertiser demand will “remain weak this summer”.

In consumer magazine publishing, Smith is expecting ‘decision time on viability for the weakest’brands during Q409. More widely, he suggests that end-of-year ‘mergers, restructures and closures’loom for ‘secondary and tertiary media brands”. He also predicts real trouble in commercial TV.

A slightly different view — not necessarily contradictory, but very different in tone — arrives courtesy of Publishing Futures 2009, a recent survey of 187 UK publishing companies put together by Wessenden Marketing, Wide Area and InPublishing Magazine.

Paid Content wrote up this survey on its release in late May, so I’m not going to repeat that exercise. What I will do, though, is emphasise how variable the impact of this recession has been across sectors and markets.

The Futures sample includes all sorts of publishers, including consumer magazine publishers and their B2B counterparts as well as regional and national newspaper publishers. As the authors admit, the self-completion methodology ‘will bias the sample towards the more successful and proactive companies who will tend to outperform the industry averages”.

Fair point. But even allowing for some positive bias, the Futures survey provides a timely reminder that ad revenues aren’t everything.

Company turnover: Almost half of respondents (44%) say that revenues are currently growing in YOY terms. 16% say turnover is static. 40% say that it’s declining. Only one-fifth of the sample suggests that turnover is declining by 10% or more YOY.

Profitability: If you thought that the entire publishing was heading towards zero profitability, think again. Only 21% say that their company’s ‘bottom line profit as a percentage of turnover’is currently zero (break-even) or less (loss-making).

Print-based display advertising: 48% say that this revenue stream will grow, or remain static during the next 12 months. (It should be said that only 16% opted for growth; 32% suggested ‘static”.)

Online display: 62% say online display revenues will grow during the next year. 23% say these revenues will remain static.

Staff numbers: 54% forecast that staff numbers will hold steady during the next year. A further 20% say that numbers will growing ‘slowly’or ‘rapidly”.

I guess it’s possible to accept these numbers — and hold the belief that this recession will be ‘lethal’for some. The important point suggested by Publishing Futures is that this industry (like most others) is all over the map in terms of revenue, profitability and the transition from print to online.

The devil will take the hindmost. He always does. But how many? In this respect, WPP’s sudden move to the dark side of the debate is a worry.