Rate of Ad Decline Slowing, Says ZenithOptimedia

LONDON: ZenithOptimedia has downgraded its 2009 ad forecast, predicting an overall 9.9 percent decline (as compared with the previously reported 8.5 percent), but has somewhat rosier expectations for the second half of the year, with a "clear improvement in the rate of decline," setting the stage for "modest" growth in 2010.

Leading the rebound will be developing markets, set to see a 7.8-percent increase in 2010 and 9.8 percent in 2011. Developed markets, however, will not fare as well, with a 2.9 percent decrease in 2010 before increasing by just 1.5 percent in 2011. 

Worldwide ad revenues will reach $444.8 billion this year, down from last year’s $493.9 billion, rising by 0.5 percent to $446.9 billion in 2010 and then 4.3 percent to $465.9 billion in 2011. North American ad revenues will fall 12.6 percent this year to $157.1 billion and then 4 percent to $150.8 billion next year, before increasing by 0.8 percent to $152.06 billion. Western Europe will take an 11.2 percent hit this year to $107.5 billion, with the decline slowing to 1 percent in 2010 to reach $106.3 billion and a 3.2 percent rebound in 2011 to $109.7 billion.

In the Asia Pacific, meanwhile, a 3.1 percent decline this year to $104 billion will quickly bounce back to 3.3 percent growth in 2010 to $107.4 billion an 6.5 percent growth in 2011 to $114.5 billion. Latin American ad revenues this year will remain flat at $30.6 billion, as compared with last year’s impressive 14.7 percent growth rate, rising 6.4 percent in 2010 to $32.5 billion and 7.5 percent in 2011 to $35 billion. Central and Eastern Europe takes the biggest percentage hit this year, with ad revenues plunging 20.9 percent to $27.9 billion. Next year is expected to see a 5-percent growth rate to $29.2 billion, followed by 9.6 percent growth to $32.1 billion. In Africa, the Middle East and the rest of the world, ad revenues this year will fall 11.4 percent to $17.9 billion, rising 14.6 percent in 2010 to $20.5 billion and 10.5 percent in 2011 to $22.6 billion.

Globally, the world’s biggest media companies experienced an average 13.1 percent ad revenue decline in the first half, ZenithOptimedia indicates. Time Warner’s media revenues fell 7.7 percent, News Corp.’s were down 16.4 percent, CBS Corporation’s fell 16.5 percent, Bertelsmann’s took a 9.9 percent hit, Mediaset’s were down by 13.7 percent, ITV 16 percent and TF1 16.7 percent.

Looking ahead, ZenithOptimedia notes: "We are still confident that the second half of the year will be much less painful for the ad market than the first half, and expect the market to hit bottom before the end of 2009."

The report continues: "The credit crisis has exposed deep structural problems in developed economies that will take years to resolve, and there remains plenty of uncertainty over the timing and scale of recovery as governments struggle to maintain spending in the face of the ballooning debt. In contrast, many developing markets have continued to grow throughout the crisis, and others look well positioned from a strong recovery in 2010. Ad expenditure has continued to grow in 27 developing markets this year, and we predict that number will nearly double to 52 in 2010. All developed markets are shrinking this year, but we expect nine to return to growth in 2010."

By medium, the Internet is the only platform expected to see ad growth this year, of 9.2 percent, reaching $54.1 billion, accounting for a 12.3 percent share, rising to 13.7 percent in 2010 and 14.9 percent in 2011. Television’s share is expected to rise from 39.3 percent this year to 39.7 percent in 2010 and 39.9 percent in 2011, with revenues increasing to $174.8 billion in 2010 from this year’s $172.3 billion and then increasing to $183.2 billion in 2011.