New Reports Paint Contrasting Pictures of Adspend Outlook

16 April 2002

Several new forecasts of adspend in some of the world’s biggest advertising markets paint very different pictures of the sector’s prospects.

Despite recent signs of economic upturn, Zenith Optimedia Group has actually lowered its adspend predictions for the globe’s seven leading ad markets (US, Germany, UK, Japan, France, Italy and Spain).

Spend in these nations – accounting for 74% of total worldwide ad expenditure – will decline 1.9% in 2002 to $218.5 billion (€248.3bn; £152.1bn), forecasts Zenith, more severe than the 0.7% fall predicted in December. In addition, last year’s decline has been revised from the previous estimate of 4.7% to 5.4%, with spend last year totalling $222.8bn.

The agency now expects no upturn before the fourth quarter, after Q1 proved disappointing. It argued that advertising is not keeping up with recent positive economic signs in Europe and the US, since wary advertisers remain reluctant to loosen their purse strings. Growth will be stronger in 2003, but there will be “at least another two years” after 2002 in which “advertising growth will underperform [GDP growth].”

Zenith predicts a 1.8% fall in US adspend this year (3.3% in real terms), with no recovery on the cards for newspaper and magazine advertising until next year. Europe will suffer a 1.6% drop (3.2% in real terms). Despite a projected 2% rise in Italian spend, Spain, Germany and the UK will witness respective declines of 4.9%, 2.8% and 1.9%.

However, Zenith’s pessimism stands in marked contrast to other, more upbeat forecasts for some of the markets involved.

In Britain, the quarterly Bellwether Report from the Institute of Practitioners in Advertising and NTC Research – surveying marketing directors at over 200 leading UK companies – found that marketing budgets were raised in Q1 for the first time since the second quarter of 2000, as business confidence and sales improved.

Around one-quarter of surveyed advertisers set new budgets during the first quarter, of which 42% increased the amount assigned to marketing from last year, with only 26% reporting a decrease.

Among marketing sectors, direct marketing reported the biggest increase in budgets for the sixth quarter in succession, while sales promotion posted its first decline in the report’s history. DM and internet spend are likely to lead a rise in budgets for 2002 as a whole, though advertising is expected to post a slight increase (albeit the smallest ever recorded by the survey).

“The latest Bellwether Report suggests that business optimism has picked up significantly since the lows of late last year,” commented the survey’s author Chris Williamson. “Although advertisers continue to exercise a great deal of caution in freeing up budgets, a corresponding marked turnaround in sentiment towards expenditure on advertising and marketing in general is apparent.”

There was a similar rebuttal to Zenith’s negative forecasts in new predictions for the US market from Deutsche Bank broadcast analyst Andrew Marcus.

Marcus has raised his forecast for 2002 American adspend to 1% growth, up from an earlier projection of a 0.9% drop. Broadcast and cable TV will enjoy respective ad revenue rises of 1.8% and 0.3%, compared with previously predicted falls of 0.5% and 0.3%. Expected growth in radio spend has been revised from 1.4% up to 3.5%, though Marcus now expects the outdoor sector to decline by 2% instead of his earlier estimate of 1.1% growth.

Data sourced from: New York Times; The Wall Street Journal Online;;; NTC Research; additional content by WARC staff