EACA study: More than half of the European countries measured indicate lower business confidence levels in Q2 2018

The rise of business confidence in the European advertising and marketing sector has come to a halt and business confidence decreased slightly in the second quarter of the year, according to the latest European Advertising Business Climate Index, issued by the European Association of Communications Agencies (EACA).

The report shows that business confidence in the ad industry decreased by 0.6 points from +8.5 in Q1/2018 to +7.9 in Q2/2018. However, confidence levels still remain strongly in the positive.

Further decline has been limited by the UK, which has the largest share of the advertising market in Europe, and for which the confidence index for has risen from 0 (Q1/2018) to +24.8 (Q2/2018). The expectation of advertising demand in the UK has also increased by 29.9 points from +17.5 to +47.4 between Q1 and Q2/2018.

In addition, high levels of confidence have been recorded particularly in the Southeastern European countries of Croatia (+21.5) and Slovenia (+37.2, the highest level of all the countries).

On the other side of the spectrum, more than half of the countries measured indicate lower business confidence levels compared to the previous quarter. The countries with the highest drop are Cyprus (decline by 23.9 points), Greece (decline by 22.1 points and holding the lowest confidence level of all the countries: -27.7), and Spain (decline by 20.2) points. The Mediterranean region displays the strongest decrease in confidence levels in future demand, prices and employment opportunities in advertising and marketing services.

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Although the decline is rather minimal, European-wide expectations of prices have undergone a downward surge from the previously measured +7.9 points to +3.5 for the next quarter (Q3/2018). The expectation of employment has also decreased from +14.2 to +10.9.

The perception of the evolution of the general business development remain in the negative for over one year now. In the most recent report, this level has been measured at -0.4. However, it has slightly increased over the past six months.

Looking into the future, the expectation of advertising demand has increased, from the previously recorded +16.3 points to +17.7 for Q3/2018. However, the demand expectations have not fully reflected the perception of the evolution of demand. According to the latest results, the lack of demand in advertising and marketing services is 45 percent responsible for limiting the business.

Romanita Oprea