Adspend growth hit by European slowdown

02 October 2012

PARIS: Global advertising expenditure is due to rise by almost 4% this year, but challenging conditions in the eurozone are hampering overall growth, according to a report by ZenithOptimedia.

In a new study, the media agency estimated that expenditure would increase by 3.8% in 2012 to reach $502bn. This marked a downgrade in expectations from June, when revenues were pegged to improve by 4.3% year on year.

The economic crisis in the eurozone was cited as the main factor behind the reduced now expected to cut budgets by 3.1% in 2012, compared with June's forecast 1.1% slide.

Greece is currently forecast to suffer a 33.2% annual contraction, a decrease reaching 13% in Portugal and 12.2% in Spain. Italy will post a 6.5% decline, with Finland off by 2.3% and the Netherlands by 1.2%.

Revenues in Western Europe as a whole should therefore also drop by 0.7% to $108bn this year.

By contrast, North America is due to experience a 4.2% lift to $172bn. This includes a 3.6% uptick in the US.

Elsewhere, Asia Pacific is likely to enjoy a 6.2% gain in adspend to $140bn, as Latin America registers a 10.1% leap to $38bn. Central and Eastern Europe is also predicted to witness a 1.8% expansion to $27bn, while the Middle East and North Africa improves by 1% to $4.2bn.

"Advertisers are broadly continuing to invest, despite the global economic concerns and issues," said Steve King, ZenithOptimedia's global CEO. "The US continues to deliver solid growth. This, combined with the growth in developing markets and in digital media, has helped mitigate the drop in eurozone spending."

By medium, newspaper ad sales could fall by 2.8% this year to $94bn, with magazines recording a 2.9% contraction to $44bn. More positively, TV should see demand harden by 4.5% to $200bn.

The internet will supply the most rapid acceleration, up by 15.4% to $88bn, as its worldwide share increases from 16% to 17.8%, largely at the expense of print titles.

Looking further ahead, ZenithOptimedia suggested that adspend would grow by 4.6% in 2013, to a value of $525bn. Emerging markets, benefiting from an average expansion of 8%, will fuel this process.

The eurozone, should it remain intact, will return to modest growth of 0.9% next year. North America will also log a 3.6% improvement on an annual basis.

In 2013, global revenues are anticipated to surge by 4.6% to $525bn, with a 5.2% increase to $552bn expected for 2014, the agency added.

Data sourced from ZenithOptimedia; additional content by Warc staff