Mixed Forecasts for 2011 Adspend

As the economic recovery took root across the globe last year, GroupM, ZenithOptimedia and others revised upward their forecasts for advertising spending for the years ahead. According to GroupM, global advertising spending in 2010 grew by 6.5 percent to $482.7 million; ZenithOptimedia’s latest estimates were a 5.5-percent growth rate in 2010 to reach $451.9 billion.

The predictions for 2012 are even rosier, with the London Olympic Games and the U.S. elections, plus continued development of markets in Asia and Latin America, expected to deliver growth rates of 5.8 percent (ZenithOptimedia) to 6.8 percent (GroupM) to 7.3 percent (PwC).

This year, however, is proving to be a challenging one for the global ad market, following the devastating Japanese earthquake and tsunami and the political turmoil in the Middle East.

In its new This Year, Next Year report, GroupM has lowered its forecast for global adspend in 2011 from 5.8 percent to 4.8 percent to reach $506 billion.

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

According to GroupM, Japan, which was previously forecast to see a 3-percent advertising spend increase this year, is likely to see a 5-percent decline. And in the Middle East, adspend is expected to fall by $1.2 billion this year.

ZenithOptimedia took a similar view in its April forecast, revising its growth projections for this year from 4.6 percent to 4.2 percent. The Japanese natural disaster and the Arab Spring have knocked an estimated $2.4 billion from global adspend this year, ZenithOptimedia projects.

And PwC, in its Global Entertainment & Media Outlook 2011-2015, predicted adspend will grow by just 3.1 percent this year to reach $456 billion.

Nielsen, meanwhile, in its Global AdView Pulse report released yesterday, had some good news to share about the start of this year, particularly for the TV sector. According to the research giant, global adspend was up by 8.8 percent in the first quarter, with TV advertising alone up 11.9 percent, upping its share of the total pie to 65.3 percent.

“With $6.50 of every ten dollars being spent on television, it’s clear that TV remains the most important and cost-effective advertising medium for companies looking to reach new consumers, especially in booming emerging markets,” said Randall Beard, the global head of advertiser solutions for Nielsen. “In fact, according to two Nielsen reports released last month, women globally said they preferred to find out information on new products and services via television more than any other medium, and the Q1 Nielsen Cross-Platform Report showed that Americans are watching more TV than ever before.”

The U.S., Nielsen notes, saw its ad market grow by 5.9 percent in Q1, while the Asia Pacific experienced a 12.4-percent gain and Latin America an 11-percent hike. In the Middle East and Africa, despite a 51-percent plummet in Egyptian ad revenues in Q1, adspend increased by 10.4 percent in the first quarter. The region that is experiencing the slowest growth rate is Western Europe, with just a 2.9-percent gain, as Greece, Iceland, Italy and Spain all saw declines, offset by double-digit gains in Turkey (12.9 percent), France (11.6 percent) and Norway (10.2 percent).

By individual market, the strongest gains worldwide were seen in Argentina, with 37 percent, and South Africa, with 34.8 percent. Other key increases were seen in the emerging markets of China, India, Indonesia, Malaysia, the Philippines and Saudi Arabia.