Ad Potency Worries Spark Research Stampede: Zenith

06 December 2005

Increasing concern among marketers that traditional advertising is losing its consumer potency has significantly boosted spending on market research, reports the London office of global media agency ZenithOptimedia .

According ZO, global spending on market research - currently $23 billion (€19.66bn; £13.29bn) - will grow by over 11% this year and by as much again in each of the following two years.

The agency reports that companies are spending more to measure the impact of advertising as they shift resources to new approaches, particularly on the internet.

It reflects marketers' belief that they can no longer rely on traditional TV advertising alone to reach a mass market. "You can spend a lot of money and reach nobody," believes Zenith ceo Steve King.

"You need a much more dynamic research structure to reflect rapidly changing media consumption patterns," he adds, "particularly among upscale and younger audiences."

The swing to greater reliance on advertising research is but one of several trends highlighted in Zenith's latest forecast of world adspend. It predicts that expenditure on traditional advertising continues to track, even exceed, the global economy.

Among the report's key projections ...

  • Internet advertising worldwide will hit $18 billion this year. If the online medium were a country, it would rank top five in size and growth - analogous to a western European country growing at the rate of an emerging Asian nation.

  • Global advertising expenditure is set to grow 4.8% in 2005, in line with its 5.0% prediction a year ago. 2006 is a touch firmer at 5.9% (it predicted 5.8% a year ago) and 2007 is down slightly at 5.7% (5.8% a year ago). The agency's opening forecast for 2008 is 6.0%.

  • The USA is the largest contributor to global advertising growth, providing 33% of the ad dollars added between 2004 and 2008 while accounting for 41%-43% of global advertising.

  • The dynamic 'BRIIC' economies of Brazil, Russia, India, Indonesia and China are only 6%- 10% of the sector but are all among the top eight growers, and predicted to supply 26% of global ad growth 2004-2008.

  • By contrast, the five large European markets (UK, Germany, France, Italy, and Spain) are making a predicted contribution of 11%, and their combined share of the global ad market consequently shrinks from 19% to 17% over the same period.

  • As to direct mail, directories (like Yellow Pages), price and other promotions, PR, market research, outbound telemarketing and miscellaneous specialist media, this group is growing at about the same rate as display advertising. However, direct mail and outbound telemarketing in particular are holding growth back..

    Data sourced from ZenithOptimedia (UK); additional content by WARC staff