Dotcom Slump Will Retard Ad Growth, Predicts Zenith

04 December 2000

Media planning and buying group Zenith Media will today confront the annual PaineWebber media conference in New York with woeful predictions of a sharp slowdown in adspend growth during 2001.

The forecast sag in spend is attributed to drastic cutbacks in advertising by the tottering dotcom sector, which in its heyday earlier this year hiked up the price of a 30-second commercial during the Super Bowl by nearly 40% to $2.2 million.

Zenith will tell delegates that next year’s advertising growth in the US will fall to a modest 4.6% - compared with 8.9% in 1999 and 8.1% this year. Around half the slowdown, says the media shop, is due to ad cuts by dotcoms; the remainder to less optimistic expectations of general economic growth. The advertising cycle is known to be a key indicator of the economic cycle, which it typically precedes.

Worldwide, Zenith points to a decline in advertising growth from 7.9% per cent this year to 6% per cent in 2001. Over the same period, European growth is forecast to decline from 8.6% to 6.7%, although the outlook for the Asia-Pacific region is rosier with a continuation of recovery from the slump of 1998 with an increase from 5.9% to 6% .

News source: Financial Times