Advertising agencies monitor: third quarter 2007

Following a brief recovery in the second quarter, turnover of advertising agencies fell again slightly in the third quarter of 2007 when compared with a year earlier. The sentiment among these agencies remains cautious, their opinions unaltered and neutral. Expectations for the next quarter, however, are more optimistic.

Turnover drops slightly

Advertising agencies showed a decline in turnover of almost 1 percent compared to the third quarter of 2006. The second quarter of 2007, turnover saw a minor recovery of half a percent. As yet, there seems to be no further recovery. The last time the advertising branch experienced a healthy turnover growth was the closing quarter of 2006. But then again, advertising agencies had just gone through two consecutive quarters with diminishing turnover. From the first quarter of 2007 onwards, turnover has been very changeable. The stable positive situation, as seen in 2005 for this branch, appears unlikely to return in the short run. With this, advertising remains the most poorly performing branch of business services overall.

Year-on-year turnover changes

Increase in order receipts

Results from the Business Sentiment Survey of October 2007 show that the sentiment in this branch is neutral. The entrepreneurs reported a considerable increase in order receipts in the third quarter compared with the second. The assessment of these orders remains neutral. According to the entrepreneurs, selling prices rose risen in the third quarter and the workforce expanded. There is no change in how the current economic climate is appraised and on balance it is judged as normal. Although the sentiment improved slowly in 2006, it still remains unstable.

Opinions on orders received and economic climate

Optimistic expectations

The entrepreneurs are optimistic in their expectations for the fourth quarter. A net majority of companies expect an increase in orders and turnover in the fourth quarter. Furthermore, they foresee steady selling prices. The expectation about the future workforce has improved: on balance 16 percent of the companies expect an increase in the number of people they will employ. The expectations of this branch are comparable with those of the whole sector.

Expectations for the fourth quarter of 2007