US adspend growth upgraded

12 April 2011

NEW YORK: An improving economy will drive US adspend to a year-on-year increase of 2.5% in 2011, forecasts from ZenithOptimedia have shown.

The media agency's previous annual forecast for the world's largest ad market, released in December 2010, indicated growth of 2.4% for this year.

Improving economic conditions and rising job hires could have since encouraged many US advertisers to raise their marketing budgets. According to latest forecasts from the IMF, the US economy will grow by 2.8% in 2011.

But significant headwinds to worldwide growth remain for the next few months - as reflected by Zenith's downgrade of its 2011 global adspend forecast from +4.6% to +4.2%.

Political unrest in the MENA region contributed to this lowered forecast, as did the disruption caused by the earthquake in Japan - the world's third-largest economy and second-largest ad market.

Recent NATO military intervention in oil-rich Libya has also led to increased wholesale energy costs, a trend which could impact on consumer spending - and, subsequently, adspend.

"It's difficult to see how this rolls out," Tim Jones, ceo of ZenithOptimedia North America, told the Wall Street Journal. "If oil prices continue to go up, it could affect ad spending in developed economies and globally."

But Zenith remains confident that these issues will not damage the ad industry over the long term, and has raised its growth forecast for 2012 from 5.2% to 5.8%.

The new Zenith data is less optimistic than the latest Warc forecasts for the US ad sector. The latest International Ad Forecast, released in March 2011, predicted 3.5% growth for this year.

This total is buoyed by 12.4% growth for online and 4.8% growth for outdoor.

Data sourced from ZenithOptimedia/Wall Street Journal/Warc; additional content by Warc staff