GroupM Lowers Global Adspend Growth Forecast

NEW YORK: GroupM has lowered its forecast for global adspend in 2011 from 5.8 percent to 4.8 percent as a result of the economic ramifications of the Japanese earthquake and tsunami and political unrest in the Middle East.

“It’s highly unusual for natural disasters to measurably impact the totality of global advertising,” said Adam Smith, GroupM futures director. “However, the earthquake and subsequent tsunami in Japan was of this rare scale.”

Japan itself, Smith said, was previously forecast to see a 3-percent advertising spend increase this year; this has been changed to a projected 5-percent decline. And in the Middle East, ad spend is expected to fall by $1.2 billion in 2011.

GroupM’s This Year, Next Year estimates that global adspend will reach $506 billion this year, rising 6.8 percent to $540.3 billion next year, driven by the summer Olympics and the 2012 U.S. elections. Advertising spending in the U.S. is forecast to hit $148 billion this year, a 3.8-percent gain, with a 4.2-percent growth estimated for 2012. GroupM’s chief investment officer, Rino Scanzoni, noted, “Without the election, U.S. ad growth in 2012 would probably be slower than what we are predicting for 2011. The elections make heavy use of local TV and radio, so national media may well find 2012 is slower-going in any case. As for the summer Olympics, the broadcasts will attract substantial advertising investment, but the majority of this will be displaced rather than new funds.”

North America overall is forecast to reach ad spending of $161.8 billion this year, with a stable 4-percent growth rate for 2012 to reach $168.3 billion. Forecasts remain strong for the Asia Pacific, with a 6.2-percent growth rate and ad spend of $157 billion this year, rising 10.3 percent to $173.1 billion in 2012. It will be a sluggish year for Western Europe, with just a 1.3-percent growth forecast for this year, to $115 billion, and 2.9 percent for 2012, to $118.4 billion. Double-digit gains are expected for Latin America, where adspend is predicted to increase 11.3 percent this year to $33.4 billion and then 13.7 percent in 2012 to $38 billion. The forecasts for CEE are 12.3 percent this year to $21.9 billion and 12.9 percent in 2012 to $24.8 billion. And the Middle East and Africa will slow from last year’s 12-percent growth rate to just 2.5 percent this year. In 2012, GroupM sees a 7-percent recovery to reach $17.7 billion.