Outlook cloudy as advertisers meet in Cannes

Outlook cloudy as advertisers meet in Cannes

Paris: Advertisers are likely to strike a cautious note at this week’s Cannes festival, after making a strong start to the year, on concern sovereign debt-fuelled European austerity measures could hamper the rebound.

The 57th Cannes Lions event is set to bring together the heads of the world’s top ad firms, including WPP, Publicis and Interpublic, as well as executives from Internet giants Facebook and Google.

Some 8,000 delegates from 90 countries are expected to take part in a week of seminars and workshops in the French seaside town. Major advertising groups posted more solid organic sales growth than expected in the first quarter of this year, thanks to economic improvement in the US and the dynamism of emerging markets.

Britain’s WPP, the top ad firm by revenues, has forecast 2% growth this year, compared with a previous forecast for flat like-for-like revenue.

Publicis also voiced optimism, though chief executive Maurice Levy has said he was cautious about the second half of the year because of “several clouds" such as concerns about the debt of some European countries.

The co-head of French market research firm Ipsos told Reuters last week he was “cautiously realistic" and was not raising his financial targets, despite better-than-expected demand, as Europe remained weak.

“It is likely that Europe will be this year for us the region of the world where we make the least headway," Didier Truchot said.

Media research group Screen Digest said in a study last week that the pick-up in the ad market would be limited to 5% in Western Europe and that the market could even continue to decline in Spain, Ireland and Greece.

Declining growth could also have a psychological impact on advertisers and cause them to adopt a herd mentality.

“Lots of advertisers decided to change their budgets in the first half because they anticipated that their competitors were going to raise their budgets as well and they wanted to be present at the moment when the ad market was going to start growing again," Vincent Letang, Screen Digest’s head of advertising research, said.

“The risk of a double dip, even if it doesn’t happen, is a factor that leads us to be cautious on the second half," he added.