There's no pleasing the ad industry when it comes to economic statistics. One of the things that really gets the goat of advertisers, especially procurement executives, is media inflation; but generally (almost by definition) the only time there's minimal inflation, or even deflation, is when the economy is in recession.
Conversely, during boom times, one of the first things to boom is advertising revenue and there may even be a double whammy at work here - people become so busy, working longer hours, that they have less time to consume media - so not only does demand rise but impact supply may also decline.
So here's the good news and bad news rolled into one - media inflation is on the up almost everywhere, according to figures from media agency sources. The most conservative figures are from MindShare, which is perhaps surprising given that Sir Martin Sorrell, the group chief executive of its parent company, WPP, is so convinced that we're climbing, dripping yet fragrant, further out of our "bath-shaped" recession.
The MindShare figures don't peer any further than the end of this year but, of all the major economies it surveyed, it reckons that Germany, the UK and Japan will actually show continued deflation. However, the US is tipped for modest growth and France is likely to show marked inflation.
In France's case, that probably doesn't reflect any underlying economic performance - it's more a case of declining TV audiences (thus making cost-per-thousand rates more expensive) as reality shows continue to bomb.
But just about everyone agrees that the US figure is the most significant.
It's the Bellwether economy and recovery in the economy in the whole is usually prefigured by a strong pick-up in media spend.
So it's to be welcomed that the latest ZenithOptimedia figures (which speculate farthest into the future, in this case 2005) see the US economy strengthening into 2004. The report also predicts that by the end of 2003, global adspend this year will be up 3.2 per cent against last year.
That doesn't mean that inflation will be 3.2 per cent, of course. Nuances of supply and demand create a complex pattern of hot and cold spots across all advertising economies. That's something that's most clearly reflected in the 2003 Global Cost Per Thousand report from Initiative Media. In looking at whether media inflation is likely to be in line with GDP growth, it concludes that the figures for TV are likeliest, market by market, to be most in line with the broader economic picture.
It is also able to pinpoint the least representative medium, cinema.
This is echoed in the other surveys too and may reflect the fact that, in growing from a lower base, cinema's graph can exhibit more volatile characteristics. Its performance may also reflect a continuing imbalance between the emotive power of the medium and its limited ability to deliver inventory.
TV, though, is clearly established as the marker medium. Sue Moseley, the managing director of Initiative Futures, says that in the major economies, by and large, cost per thousands on TV are growing ahead of the economy. She states: "For the past couple of years, they had been falling into line. Now they are pulling ahead. That has all sorts of implications, of course, for advertisers, whose cost base will be running ahead of profit growth. But that's generally a problem for all markets. It's the first time in three years that growth is real - that's to say, running ahead of price inflation."
Steve Pollock, the managing partner on MindShare's Gillette business, doesn't violently disagree. "It's always dangerous to draw conclusions that are too simplistic," he says. "It's clear, though, that audience levels across the totality of a marketplace are anything but volatile. When a market evolves from four TV channels to 400, it just means that the same total amount of viewing is spread. In contrast to the press, which can up pagination to meet demand, TV channels can't increase the number of minutes of advertising they run in breaks. The law won't let them in most developed markets. With supply effectively capped, increased demand usually feeds straight though into inflation on TV."
So, which economies are in the best shape? This is where there's the greatest scope for disagreement. For instance, ZenithOptimedia is more optimistic about Germany than the others; Initiative points to continuing boom times in Russia, China and Brazil in contrast to the sluggish behaviour of France, Japan and Germany, with the US and the UK in the "leader" group showing strong but not outrageous growth. MindShare, in its biggest departure from industry consensus, doesn't agree - it has the UK TV market actually deflating by 9 per cent this year. Let's hope that, come bath time, it turns out to be completely wrong.
INTERNATIONAL ADSPEND FORECASTS
COUNTRY Adspend in euros millions
(year-on-year % change)
France 9,600 (-1.4) 9,719 (1.2)
Germany 18,042 (-4.1) 17,878 (-0.9)
Italy 7,520 (-3.5) 7,558 (0.5)
UK 1 10,136 (0.1) 10,181 (0.4)
Japan 2 4,118,100 (-1.7) 4,140,000 (-6.8)
USA 3 224,642 (1.7) 230,987 (2.8)
France 9,991 (2.8) 10,290 (3.0)
Germany 18,506 (3.5) 19,524 (5.5)
Italy 7,781 (3.0) 8,058 (3.6)
UK 1 10,509 (3.2) 10,805 (2.8)
Japan 2 4,190,500 (1.5) 4,251,000 (1.9)
USA 3 241,204 (4.4) 250,416 (3.8)
*All figures at current prices 1pounds million 2Yen
million 3dollars US million
Source: ZenithOptimedia group.
Country Media cost inflation (%)
France 0 7
Germany -3 0
Italy -5 -1
UK 0 -3
Japan -5 -2
USA 5 2
*Forecast figures. Source: MindShare.