Global adspend to fall 5.5%

25 June 2009

LONDON: Global adspend will decline by 5.5% this year, to $417 billion (€298bn; £254bn), but the slowdown will ease slightly in 2010, according to a new forecast from GroupM, the management arm of WPP Group's media agencies.

GroupM predicts that worldwide expenditure levels will decrease by 1.4%, to $411 billion, next year, echoing the comments of Sir Martin Sorrell, who has previously argued the advertising recession will take on an "italic L-shape".

The company's futures director, Adam Smith, wrote that "if our forecasts are right, ad investment in 2010 will struggle to match 2004 in real terms."

However, while visibility is limited as "few clients have decided what to spend in the fourth quarter of 2009, never mind 2010," Smith further stated that it appears "some sort of recovery is at hand." 
Latin America will be among the best-performing regions in the next two years, seeing annual growth of 6.9% and then 10.7% over this period, taking the regional market to a value of $10.7bn by 2010.

In Asia Pacific, total measured media spending will fall by 2.8% in 2009, to $114bn, before growing by 3.2%, to $117bn, over the following 12 months.

Within this, the Chinese ad market will improve by 3.2% this year and by 8.9% in 2010, while North Asia will also see adspend levels rise by 1.4% and 8.3% respectively on a per annum basis.

The ten countries in the ASEAN region – including Indonesia, Malaysia Singapore and Thailand – are similarly set to see ad revenues rise by 4.3% and 10.7% this year and next.

By contrast, expenditure levels in Western Europe will contract by 11.1% in 2009 and 3.5% in 2010, when net marketing spending will stand at $91bn.

Emerging Europe, however, will follow up a slide of 16.3% in 2009 and with an annual improvement of 2.7% at the end of the decade, when regional adspend will reach $15.4bn.

The Middle East & Africa will also see a year-on-year decline of 1.5% this year, proceeded by an uptick of 7.5% in 2010, to $13bn.

North American adspend will fall 4.2% this year and by 6.1% in 2010, to a total of $150bn, with the US down by 4.3% in the first year and 6.5% in year two.

Media expenditure in Russia will also shrink by 19% in 2009, returning to growth of 9.1% the year after, GroupM predicts. 

The company's figures were drawn from 70 different countries, and based on data collected from WPP agencies operating in these various nations.

Smith warned, however, that "anyone looking for the bottom of the market may care to note ad investment in traditional media (excluding digital) is likely to fall 10% in the developed world this year."

While digital media will increase its share of the global ad market to 15% in 2010 – up from 10% in 2007, GroupM's futures director added that this channel is "not recession-proof either."

Data sourced from Reuters/MediaPost/Guardian; additional content by WARC staff