Group Press Releases

Global Ad Spend Set To Maintain Steady Growth In 2005

- Accelerated growth in Asian market set to continue
- Online the fastest growing medium

Figures in brackets show our previous forecast, issued in March 2005

Carat, part of Aegis Group plc, announced today that it has slightly upgraded its 2005 global advertising expenditure forecast to 5.2%. This increase is primarily driven by growth in Asia. The Asian advertising market is thriving and, at the current growth rate, it will overtake Europe in spend terms by 2008.

Carat has lowered its 2005 European forecast by 0.4% to reflect the softer performance in the UK, Germany, France and Italy although adspend remains strong in the Nordics and Central Europe. Growth trends in the USA are in line with expectations. In the absence of major political and sport events, it is primarily the underlying performance of the world's economies that is shaping growth.

For 2006, Carat expects that next year's Football World Cup in Germany and to a lesser extent the Winter Olympics in Italy will boost adspend further and forecasts global growth of 5.8%.

Carat's forecasts are based on the following:

* Advertising market conditions in Europe remain varied with Germany, France and Italy lacking momentum. The UK is softer than expected but still performing relatively soundly. Adspend in the rest of the region is growing well, with Central Europe improving at over 10% and Russia now the 6th largest European market, just after Spain. Central Europe's share of European adspend will reach 16% in 2006 (vs 12% four years ago). The Nordics remain on track with over 4% growth.

* The US economy is sending contradictory signals. On the one hand, GDP growth and consumer confidence are softer, but on the other, the job market and consumer spending remain strong. Our 2005 forecast remains unchanged with growth at 4.5%.

* Asia continues to grow fast and Carat expects that at current rates, it will be a bigger advertising market than Europe by 2008. After three years of negative growth, the Japanese advertising market is recovering; economic prospects are a little softer this year, but the growth will continue with the 2005 World Expo boosting the trend. China continues to be strong, and other Asian markets are showing clear growth. Consequently, Carat expects adspend growth in China, Hong Kong, India and Indonesia to reach more than 14% this year and believes this level of growth will continue.

Commenting, Robert Lerwill, Chief Executive of Aegis Group plc said:

"We've slightly raised our global forecast for the current year. Adspend growth in Asia is expected to grow strongly driven by the continued expansion of the Chinese market. Adspend in the US continues to make steady progress, despite conflicting signals from different areas of the economy. In Europe, the conditions in some of the major economies suggest a slight slowing in adspend, but this is largely offset by growth in Central and Eastern Europe which is offering marketers some exciting opportunities.

We are seeing some interesting shifts in the allocation of advertising budgets. Television's share of advertising spend is levelling out and newspaper's share of advertising is declining, with budgets shifting to the internet. Spend on online advertising has outgrown radio and we expect to see this catching up with outdoor during 2005. The World Cup and the winter Olympics should provide a fillip to adspend growth in 2006."

Carat's full adspend forecasts by geography and media are available on the www.carat.com website.

For further information contact:

Richard Walters
Aegis Group plc
+44 (0) 20 7070 7700

Caroline Leroi
Aegis Media International
+44 (0) 20 7550 3271

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