Global adspend to rise

19 October 2010

PARIS: Advertising expenditure will increase by over 4% worldwide in each of the next two years, with TV, social media and mobile all enjoying strengthening demand.

ZenithOptimedia, a unit of Publicis Groupe, estimated revenues would rise 4.8% to $449.5bn (€323.7bn; £282.7bn) this year, compared with the 3.5% uptick outlined in its last report, published three months ago.

"We are seeing growth across the board and the recovery is steeper than we originally forecast," Tim Jones, ceo of ZenithOptimedia's North American arm, said.

The US is set for 2.4% jump, to $151.5bn, augmented by political adspend alongside hardening sentiment among automakers, retailers and financial service providers.

Such an improvement constitutes a significant mark-up on the 1.1% increase detailed in Zenith's previous report, and also reflects better-than-expected results recorded by many media owners.

South America is likely to be the best-performing region as ad sales grow 16.8%, with Brazil having posted a 32% surge during the second quarter.

In Europe, Belgium France, Finland, Norway and Sweden have seen conditions pick up somewhat, although nations including Greece, Hungary and Latvia face a challenging outlook.

"Summer is traditionally a quiet season for advertising in Western Europe, but this summer was a strong one, partly thanks to the soccer World Cup in a favourable time zone for European viewers," ZenithOptimedia said.

Japan was pegged to register a 0.3% decline this year, moderately healthier than the 0.7% drop predicted in July.

More positively, Asia Pacific as a whole should see growth surpassing 6% in both 2010 and 2011 and topping 7% in 2012.

Television ad revenues are anticipated to leap 9% worldwide this year, hitting $180.4bn, while online expands 13% to $61.5bn, both gaining as newspapers struggle.

TV's share is expected to reach 41.6% in 2012, measured against 39.2% in 2009, figures standing at 16.5% and 12.8% respectively concerning digital channels.

Paid search will deliver 51.4% of new media returns in two years time, when display will take 33%, aided by social media, video and mobile formats.

Indeed, mobile was forecast to grow at 44.3% per year between 2009 and 2012, with social media up 31.2% annually in the same period, ahead of the 14.6% acceleration across the web as a whole.
Looking forward, global advertising expenditure could witness a slightly slower 4.6% improvement next year.

"Advertisers in the developed markets remain cautious about the future, and will not commit to ambitious expansion plans while unemployment and debt remain so high, and government spending cuts threaten the recovery in demand," ZenithOptimedia suggested.

Brands owners are due to boost their investment by a further 5.4% during 2012, Zenith stated.

Adspend levels currently equate to a 0.75% share of GDP, a decline from 0.88% in 2007, with a decrease to 0.74% probable in 2012.

"We do not expect this proportion to rise while debt, unemployment and austerity threaten the recovery," Zenith concluded.

Data sourced from Wall Street Journal/Reuters/New Media Age/Campaign Asia; additional content by Warc staff