Euro crisis impacts adspend growth

20 June 2012

PARIS: Global advertising expenditure should rise by over 4% this year, but expectations for the sector's growth rate have diminished as a result of the crisis in the eurozone.

According to a forecast from ZenithOptimedia, a unit of Publicis Groupe, worldwide adspend levels will expand by 4.3% in 2012, hitting $502bn. This, however, marked a downgrade of 0.5% from the organisation's industry outlook published in March.

The economic challenges facing the eurozone were among the primary reasons for this decision. As an example, projections for Spain were revised from a 5% contraction to a 12% decline in revenues.

Similarly, Greece is anticipated to witness a 19.5% drop off in returns, part of a longer term trend that has resulted in a decline of more than 50% on this measure during the past five years.

As a whole, the outlay on advertising across the eurozone was pegged to slide by 1.1% year on year, as Western Europe as a whole sees a lift of less than 0.5%.

Predictions for Asia were also revised from a 7.4% to a 6.7% increase, totals standing at 9.2% and 7.8% for Latin America respectively. Prospects for the US, however, were unchanged, at 3.6% growth.

"As is going on in most industries at the moment, there is a bit of a flight to safety," Jonathan Barnard, ZenithOptimedia's head of publications, said.

“Advertisers are withdrawing from the riskier ends of their investments and focusing on where growth is coming from. We don't think the money from the eurozone is being spent elsewhere."

This means the positive "quadrennial effect" of the Olympic Games, Euro 2012 football championship and US Presidential elections, together generating an additional $6.3bn, will be slightly offset.

Looking ahead, ZenithOptimedia did not change its forecasts for 2013 and 2014. Global ad revenues anticipated to stand at $539bn by the end of this period.

MAGNAGLOBAL, part of Interpublic Group, also recently predicted worldwide adspend will increase by 4.8% in 2012, versus the 5% lift it anticipated at the close of 2011.

The company stated that media revenues will hit $480bn this year. Western Europe ad sales are due to shrink by 0.2%, versus growth of 3.9% in North America, 6.4% in Central and Eastern Europe, 8.3% in Asia Pacific and 9% in Latin America.

Data sourced from Financial Times/Reuters; additional content by Warc staff