GroupM Forecasts Modest Recovery in 2010

LONDON: GroupM has released its latest forecasts for global ad spend, predicting a 5.5 percent decrease this year to $417 billion, slowing to a 1.4-percent decline in 2010 to $411 billion.

The BRIC nations (Brazil, Russia, India and China) are expected to lead the recovery, while ad spending in the G7 nations (Canada, France, Germany, Italy, Japan, the U.S. and the U.K.) will probably lag behind, GroupM notes in the This Year, Next Year report, drawn from data supplied by parent company WPP.

GroupM futures director Adam Smith stated: “China’s economic stimulus has already bolstered confidence, and the demand for advertising in Russia will recover quickly if $70-a-barrel oil prices are here to stay. Brazil and Indonesia remain among the top growth contributors, and India is predicted to come back strongly after pausing in 2009.

In the U.S., meanwhile, ad spend is expected to drop 4.3 percent this year, as compared with a 6.4-percent average decline for the G7 nations. In 2010, U.S. ad expenditure is forecast to fall 6.5 percent, while the G7 nations overall will experience an average 5.5 percent drop. While the ad markets in the major territories are still expected to face difficulties next year, Smith notes the prospects for a modest recovery. "Advertising lagged economic recovery for about 18 months after the recession of 1992 and about 12 months after the one in 2001. Our global forecast for 2009 has finally stopped tumbling. The 15 countries still reporting positive ad growth in 2009 has become 33 in 2010, and the number could rise as we phase through the year.”

Of the U.S. market, GroupM’s chief investment officer, Rino Scanzoni, noted: "We expect a bottoming out on local media spend in 2009 with more stability into 2010. However, we are expecting further contraction on national media particularly television as clients adjust budgets to reflect a continued pessimistic consumer spending forecast."

North America will remain the biggest ad market, with spend of $160.4 billion this year, down 4.2 percent, and $150.6 billion in 2010, down 6.1 percent. In Western Europe, ad revenues are forecast to fall 11.1 percent to $94.5 billion this year and then 3.5 percent next year to $91.4 billion. Asia Pacific is expected to fare better, with a 2.8 percent fall this year to $113.6 billion, rebounding to 117.2 billion (up 3.2 percent) in 2010. Central and Eastern Europe will be down 16.3 percent this year to $15 billion, before climbing back up by 2.7 percent next year to $15.4 billion. The Middle East and Africa is forecast to be down 1.5 percent to $12.8 billion this year, with a 7.5-percent increase expected for 2010, to $13.8 billion. Latin America, meanwhile, is forecast to see continued growth, of 6.9 percent this year to $20.1 billion (down from last year’s 11.3 percent growth rate), and 10.7 percent next year to $22.2 billion.