NEW YORK — A jittery, pre-9/11 stock market held its breath for much of Tuesday, but media stocks enjoyed a welcome fillip, despite a less-than-sanguine advertising report from investment bank JPMorganChase.
The new report, from JP analyst Spencer Wang, cast a pall on concensus market expectations of a 2-3% increase in U.S. ad spend this year, predicting only a nominal 1-2% uptick for the whole of 2002. While still a considerable improvement on 2001’s 6% fall, JPMorgan’s projections imply 3% growth for the second half of this year, thanks to political advertising and signs of a modest economic recovery, particularly in the strong TV and radio mediums. Still, low consumer confidence and slowed GDP growth put the breaks on a more bullish rebound. Analyst Spencer Wang expects ad spend to match GDP growth in 2003.
“While signs of a moderate economic recovery and the strong TV upfront markets are encouraging, 2003 ad spending will be challenged by the absence of both significant political advertising and the airing of the Winter Olympics,” said Wang.
Overall, JPMorgan expects broadcast networks to show 5% annual growth while local TV avails should gain even more from the political season, with a 6-7% boost for the year. Citing a poorer upfront market, Wang reduced his forecast for cable TV network advertising from 9% to 5%.
On Monday, UK-based global ad buyer Zenith Optimedia also warned that “patchy U.S. demand does not spell recover yet,” in the latest quarterly update of its Advertising Expenditure Forecast for the world’s seven largest advertising markets which constitute nearly three-quarters of the world’s ad spending. Across this seven-country group, Zenith is expecting
Prices staying firm
In the U.S., Zenith expects 2002 to finish almost on par with 2001 in cash dollars, thanks to a late-year increase in local TV spending by politicians, movie studios, auto manufacturers and retail outlets. Tight inventory in the second half of this year is keeping prices firm in local TV and radio while a steady TV scatter market is making up for the dismal 2001-2002. Zenith also cautioned about putting too much wait on the 2002-2003 upfront, noting that even in a good year, the upfront market accounts for only 25% of all TV spend and that a large proportion of these future bookings are cancellable.