Adland’s crystal balls remain murky

As 2012 hurtles towards its finale, hopefully not the one foreseen by the Mayans, the industry’s holding groups have dusted down their crystal balls, but how do the outlooks from WPP, Publicis Groupe and Interpublic stack-up?

Let’s be honest, 2012 has been tough for many of us whose livelihoods are tied in one way or another to advertising expenditure. The structural and cyclical shifts taking place across the media landscape continue. But as the austerity months roll into years since 2009 dropped off a cliff, it’s getting harder to distinguish one from the other; the question is where, not just when, will growth return?

The general consensus is that our golden summer of the London 2012 Olympics and Paralympics proved to be a great year for the national psyche, but not much of a fillip for ad spend, with the notable exception of those working in Outdoor.

For ZenithOptimedia, as far as the ad market is concerned, measured media in the UK enjoyed less than half as much growth as they had anticipated this time last year. In December 2011, Zenith tipped 3.7% growth for the UK’s Olympic year, last week this was downgraded to just 1.6%.

This trend is largely echoed by Interpublic’s Magna Global ad revenues forecast – which unlike spend figures strips out the standardised 15% agency commissions – and includes insights from its UM and Initiative networks.

Olympics 2012 on the BBC

No Olympic boost for UK media

This time last year, Magna expected UK media revenues to grow 4.4% in 2012, now its forecasts have been slashed to exactly half of that, at 2.2%. Vincent Letang, director of global forecasting, notes that the BBC-led Olympics proved to be a negative factor for commercial television, and goes on to tip growth of just 1.9% for 2013.

For those wanting a more uplifting message before their turkey, turn to WPP’s GroupM, where the UK has outperformed expectations this year. Last December, GroupM expected 3.2% growth, this was revised last week to 3.4%. GroupM is similarly confident about next year, with growth of 3.5% expected.

It’s worth noting that within half an hour of GroupM’s forecast being presented by future’s director Adam Smith and co in New York on Monday (3 December), WPP’s own chief executive, Sir Martin Sorrell, was even questioning its bullishness.

The Sage of Soho admitted at a UBS presentation he believed his group’s global figures for 2013 could be “a little optimistic”, and went on to identify “grey swans” that make him “err on the side of caution at the moment”.

WPP's Martin Sorrell

An adaptation of the expression “black swans”, referring to unknown and unexpected seismic events, Sorrell’s swans are grey because they are potential problems that are known about – the most pressing being an inability to avert a fiscal crisis in the US economy, short-termism in clients budgets, and problems in the Eurozone.

GroupM and Publicis Groupe’s Zenith largely agree that those operating in print have been hardest hit in 2012, with both newspapers and magazines tipped to fall in the region of 6%-10%.

Both also track a year of two halves for TV, with the first six months showing around 3% growth on the back of the Jubilee, Euro 2012 and pre-Olympics, but the second half of the year is expected to tumble around 5%, with blame apportioned to a post London 2012 comedown and George Osborne’s wider fragile economy.

For this year and next, GroupM is notably more upbeat about radio and cinema, but the biggest discrepancy between the two global groups surrounds digital, where the amount clients spend on search in particular is far harder to ascertain.

Both forecasters use IAB figures as a starting point, which are then supplemented with their own on the ground experience. GroupM is far more bullish about search (18%) and display (13%) growth this year, than Zenith (10% and 13%).

Smith highlights how much search has benefitted from the rise of mobile/tablet queries, which are substantial (20% of all queries typical for several verticals), and mostly additional to desktop. The rise of e-commerce, already 17% of UK retail per IMRG, and growing in double digits, is also believed to making a big impact on search spend.

Mobile to change media mix

Mobile to change landscape in 2013

GroupM’s North America chief executive, Rob Norman, believes mobility adds a new “proxy for intent” to search, by which he means knowing someone’s location gives the search marketer more to chew on; and as mobile is likely to be closer to the sale, attribution is clearer, which is always good for business.

The increasing role of mobile in the media mix is singled out by Havas’ global chief executive David Jones too, who believes the rise in location-based services will be “absolutely dramatic”. The 46 year old leader has already started to reposition Havas around ‘connecting people with brands through technology’ in anticipation.

While Havas doesn’t compile its own global report, Jones added: “There is no reason to believe that next year is going to be either dramatically better or dramatically worse than this year.”

Goldman Sachs has just upgraded Havas to a ‘conviction buy’, reflecting strong performances against its competitive set in many regions around the world. The Havas leader said: “When there’s a shark in the water, you don’t need to swim faster than the shark, just faster than everybody else.”

Jones didn’t go as far as to say he was leaving Martin Sorrell and Maurice Lévy to the sharks, but did tell me: “I’m looking at the next four or five years, rather than just the next year, whereas both of them – given that they are now in their 70s – are probably not looking at the next decade.”

For the record, Martin Sorrell is a sprightly 67, while Publicis Groupe’s Maurice Lévy is 70. So that’s someone off the Christmas card list.

UK ad spend £GBP (% growth) forecasts
Zenith 2012f 2013f GroupM 2012f 2013f
TV £3,258m (-1.0%) £3,225m (-1.0%) £3,468m (-0.7%) £3,538m (2.0%)
Radio £455m (0.7%) £459m (0.9%) £376m (3.5%) £387m (3.0%)
Newspapers £2,335m (-7.3%) £2,276m (-2.5%) £2,276m (-9.6%) £2,061m (-9.4%)
Magazines £784m (-6.3%) £767m (-2.2%) £752m (-10.1%) £684m (-9.0%)
Cinema £147m (-2.0%) £154m (4.8%) £161m (10.0%) £166m (3.0%)
Outdoor £798m (6.0%) £800m (0.3%) £766m (8.0%) £750m (-2.0%)
Interaction / Internet £4,396m (10.5%) £4,800m (9.2%) £5,375m (14.8%) £6,042m (12.4%)
Media total £12,172m (1.6%) £12,481 (2.5%) £13,173m (3.4%) £13,629m (3.5%)