WPP says media is battling to survive

GROUP M, the media-buying arm of WPP, yesterday slashed its advertising revenue forecasts for the second time this year, warning that many household names in the media will struggle to make it through the recession.<br /><br />Group M said that UK media investment will fall by 14 per cent in 2009, a steeper fall than the 11 per cent drop predicted in March, and the five per cent predicted in December 2008.<br /><br />The group gave a gloomy outlook for both this year and next, contrary to the forecasts of some other media owners, who have recently said that the economic environment is improving.<br /><br />&ldquo;No previous ad recession has put household media names at risk like this one has,&rdquo; said the Group M futures director, Adam Smith, adding that the effect is being felt across the industry, from local newspapers to high-street magazines and national TV channels.<br /><br />&ldquo;Advertiser demand is set to remain weak this summer so it is possible mergers, restructures and closures will accelerate as we move into the fourth quarter,&rdquo; he added.<br /><br />Newspapers overall are now predicted to see a 26 per cent drop off in advertising income, driven mainly by regional newspapers, which Group M expects to shed 32 per cent thanks to the recession and a move to web advertising.<br /><br />The drop for national newspapers is forecast to be 19 per cent, with consumer magazines down 20 per cent.<br /><br />&ldquo;The seasonal spike in the fourth quarter is our best hope for the year, but with recession and unemployment sustained into 2010 this is more likely to be respite than resurrection,&rdquo; Group M said of the outlook for national newspapers.<br /><br />The report forecasts that TV revenues will shed 14 per cent, radio 15 per cent &ndash; but internet advertising is predicted to be flat.<br /><br />&ldquo;We hope to see some sort of recovery in 2010, but assume demand will remain weak for at least another year as falling jobs, wages, debt and house prices play out,&rdquo; concluded the report.