SPI Index TV spot purchasing cost trend forecast in the first half in 2010

1. Indices used for the trend forecast: SPI Index and TOPIX (Tokyo Stock Price Index)

SPI found the strong correlation between SPI Index (3 major cities, sum) and the TOPIX. Key finding in SPI’s analysis is that the trend of SPI Index follows that of TOPIX 9 months later. (Ref. Chart 1) . The analysis indicates that the general business market trend that appears in such index like TOPIX could affect the advertising spending, and the trend is reflected to the SPI Index that showcases the balance between the demand and the supply in the overall advertising industry.

Chart 1: Correlation between SPI Index and TOPIX (1998-2009)

*1 SPI Index shows the weighted trend that excludes seasonality and noise, and TOPIX refers to the trend of TOPIX versus the same month of the previous year.

As for the above SPI Index, SPI has referred to the TOPIX that showed the strongest correlation while we have seen correlation with other market indices such as Composite Index, Diffusion Index published by Cabinet Office, Government of Japan.

2. SPI Index forecast for the first half of 2010

The analysis below is to provide with SPI’s forecast for the first half of 2010 primarily based on the trend of TOPIX.

Chart 2: Correlation between SPI Index and TOPIX (2009 and onwards)

Chart 2 indicates the downturn trend is recovering based on the index of TOPIX that tends to go 9 months prior to, which hit the bottom in July, 2009 (versus Actual in August, 2008), and SPI Index would possibly follow the trend of TOPIX. Remarks to be considered is that SPI Index has shown the continuous deflation since 2005 and does not seem to hit the bottom since July. With the difference taken into account, TOPIX trend would not necessarily bring an immediate impact to SPI Index recovery, and we also need to consider that economy is still instable led by the strong Japanese Yen and the accelerating deflation in Japan. That would affect the overall businesses in Japan, and the downturn of the overall viewership of TV and as a consequence, the advertisers are yet unable to aggressively invest to the TV advertisings. At the same time, there is an official industry remark that the advertising market will gradually recover in 2010, which could support the upward trend of SPI Index.

With both above perspectives taken into account, the SPI Index trend forecast for the first half of 2010 concludes that the overall downtrend might stop and that we would see the symptom for the upward trend in the TV spot purchasing cost.

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