World Adspend to Hit $604bn in 2006, Opines Savant

07 December 2005

The Season of Santa is nowadays at the point of convergence with the Season of Savants, with media seers vying to predict adland's fortunes in the year to come.

On Monday ZenithOptimedia ceo Steve King foretold that global advertising expenditure in 2006 will reach £427.3 billion ($743.37bn; €630.67bn).

While on the same day three thousand miles distant, Universal McCann media sage Robert J Coen dusted down his crystal ball for the UBS Annual Global Media Conference, divining to his New York audience that next year's world total adspend is set to hit $604bn - an increase of 6% on 2005.

Give or take a hundred billion or so, the two wise men are not that far apart, although Coen is the more cautious: "We're not looking for a boom, but we think things are looking a little bit better in 2006."

Coen and King are also of the same mind as to the main adspend drivers for next year. In key industrialized nations, Coen doesn't "expect outstanding, across-the-board growth". He envisages a growth rate 5% or less next year.

But there will be improvements in certain emerging economies, among them Argentina (+15%), Brazil (+23%), Mexico (+10%), China (+20%), Slovakia (+25%) and Russia (+32%).

As to this year, it's better forgotten it seems. Coen revised downward his earlier US adspend growth projection for 2005 from 6.4% to 4.6% - in dollar terms a total of $276bn. His reasons for this plunge of 28 percentage points?

"Strong resentment of high media price increases was widespread and ... the pressure for measurable evidence of the return on advertising investments grew," opined the sage. He also pointed to another factor: the growing influence of procurement departments in determining marketing spending.

But Coen divines that the US ad economy will see better times in 2006, with spending rising 5.8% to $292bn. "The difficulties and expenses of complying with Sarbanes-Oxley should moderate. Uncertainties and cautiousness should diminish and more risk taking with built-up corporate demand should increase the demand for advertising time and space."

Data sourced from AdAge (USA); additional content by WARC staff