Ad Forecasts for 2010 Improve

LONDON: GroupM and ZenithOptimedia have both upgraded their advertising forecasts for 2010, predicting growth of just under 1 percent following the declines of this year.

According to GroupM research, ad spending will be down by 6.6 percent this year to $445 billion, with a 0.8-percent increase in 2010 to $448 billion. This is an improvement on the previously forecast 1.4-percent decline. The recovery will be led by the BRIC countries, GroupM says in its new This Year, Next Year report, while U.S. and Western European spending will continue to lag behind. “We expect the BRIC and Next 11 countries to underwrite ad growth with a pronounced V-shaped recovery which is already underway in China,” said Adam Smith, GroupM’s futures director. “In the U.S. and many mature economies, deleveraging and sluggish job creation will likely postpone recovery until 2011.”

This year, U.S. ad revenues will be down by 8 percent, with another 4.3-percent fall in 2010. Total North American ad spending will be down 7.8 percent this year to $155.8 billion, with a 4-percent fall next year to $149.6 billion. In Western Europe, meanwhile, this year’s decline is forecast to be 12.8 percent to $106.5 billion, slowing to a 1.6-percent fall in 2010 to $104.8 billion. In Emerging Europe, this year’s significant 18.2-percent fall to $17.4 billion will be followed by a 6.3-percent increase to $18.5 billion. The Asia Pacific has held up well, with just a 0.4-percent decline in 2009 to $126.8 billion, with a 5.3-percent increase expected in 2010 to $133.6 billion. In Latin America, this year’s ad spend will rise 7 percent to $24.3 billion, with a 10.5-percent increase to $26.9 billion estimated for 2010. In the Middle East and Africa, adspend will be stable this year at $13.8 billion and rise 7 percent in 2010 to $14.8 billion.

ZenithOptimedia’s new forecast, meanwhile, sees a worldwide 10.2-percent ad decline this year, with a 0.9-percent increase in 2010—the group’s first upgraded forecast for next year since June 2008. By 2011, the ad market will increase to 3.9 percent, rising to 4.8 percent in 2012. ZenithOptimedia notes, however, that conditions in some markets will hinder the ad recovery. It points to the elimination of public TV advertising in France and Spain and the reduction of ads permitted in China.

Like GroupM, ZenithOptimedia sees developed nation as continued to struggle in 2010; a 2.4-percent decline in North America, 0.5 percent in Western Europe and 3.2 percent in Japan, ahead of "mild growth" in 2011. Asia Pacific, Latin America and Central and Eastern Europe, meanwhile, are all expected to see growth.

North American ad spending in 2010 is forecast to be $153.3 billion, down from $157 billion this year. In Western Europe, ZenithOptimedia forecasts $106.2 billion for next year. Asia Pacific adspend is forecast to increase 3.8 percent next year to $107.9 billion. A 2.3-percent growth rate is seen in Central and Eastern Europe, with 2010 estimated ad spend of $28.2 billion. An 8.1-percent rise is forecast for Latin America to $33 billion.

By medium, television will continue to take the lion’s share of adspend, with 39.7 percent next year, up from 39.2 percent this year, rising to 40 percent in 2011. Television ad expenditure is expected to increase to $175 billion in 2010 from $171.6 billion in 2009. Internet advertising, meanwhile, is expected to rise from $54 billion this year to $60.4 billion in 2010.