ZenithOptimedia Forecasts 6.9-Percent Ad Decline

LONDON: Global ad expenditure is expected to fall 6.9 percent this year to $453.2 billion, according to ZenithOptimedia, which also forecasts a "slight recovery" of 1.5 percent in 2010 to $460 billion, followed by a 4.5-percent increase to $480.7 billion in 2011.

Issuing its latest ad research, ZenithOptimedia also pointed out that the recession has led to people spending more time at home, where they are consuming more media, particularly TV and the Internet.

TV advertising this year is forecast to be $173.1 billion, down 5.5 percent from 2008, accounting for a 38.6-percent share of the total ad pie. This is forecast to rise to 39.3 percent in 2010, when TV ad spend is estimated to rise to $179.1 billion, increasing to $186.6 billion in 2011. 

By region, North America remains the largest ad market, at an estimated $166.3 billion this year, down 8.3 percent on 2008. Further contraction is forecast for 2010, when ad expenditure will fall to $163.8 billion, recovering slightly to $165.8 billion in 2011. Western Europe ad spend will reach $110.9 billion this year, a 6.7-percent decline, rising to $112.1 billion next year and then $115.8 billion in 2011. In the Asia Pacific, ZenithOptimedia expects ad expenditures of $99.1 billion in 2009, a 3.4-percent decline, with a 2.7-percent increase to $101.7 billion in 2010 and then a 6.7-percent rise to $108.5 billion in 2011. Central and Eastern Europe ad spend was expected to fall almost 14 percent this year to $30.2 billion, rising slightly to $31.6 billion next year and then increasing by 9.5 percent to $34.5 billion in 2011. Latin America is expected to be relatively stable this year, with ad spend of $29.1 billion, rising to $33 billion in 2011. For Africa, the Middle East and rest of the world, ZenithOptimedia forecasts ad spend of $17.8 billion this year, with rapid growth to $23.1 billion in 2011.

"We are currently in the middle of a period of steep deterioration in ad expenditure," ZenithOptimedia’s report says. "The downturn began in in Q3 2008, accelerated in Q4, and Q1 2009 was at least as tough as the preceding quarter. As we enter Q2, there is limited long-term visibility in the market as most advertisers wait until the last moment to confirm their spending commitments. Many are treating advertising as a discretionary expense, and one they find convenient to cut. Ad expenditure correlates strongly with corporate profits, and the ad market is unlikely to start its recovery until profits start to pick up again."