LONDON: The Season of the Seers is upon us once again with the haruspices of the advertising and financial worlds predicting the fortunes of world ad markets.
Prominent among the prescient is Publicis Groupe media network ZenithOptimedia, which foresees global ad expenditure growing 6.7% in 2008 (versus 5.3% this year), courtesy of those quadrennial caffeine shots - the Olympic Games, US presidential elections and European soccer championships,
Among Zenith's prophesies:
- Developing markets are now the primary contributors to global expansion, compensating for slow growth in developed markets.
- By 2010 China will be the fourth-largest advertising market, and Russia will be sixth.
- Between 2007 and 2010 internet adspend will grow 69% and raise its market share from 8.1% to 11.5%.
- In 2010 the internet will overtake magazines to become the world's third-largest advertising medium.
- Unlike the periods preceding the last two ad recessions, advertisers have not been increasing their budgets faster than warranted by economic growth. Instead, over the last few years ad expenditure has roughly tracked the economy, remaining at 0.92% to 0.93% of GDP.
- Before the last two recessions this proportion increased rapidly and peaked at 1.08% (in 1989) and 1.06% (in 2000). The last ad recession also followed a period of heavy, one-off expenditure by dotcom and telecoms companies, convinced that all they needed to do was establish their brands, and profits would inevitably follow.
- Although the housing downturn and credit squeeze will hit property and finance advertising in advanced economies like the US, world ad markets will be boosted by $6 billion (€4.08bn; £2.92bn) in spending from next year's quadrennial events.
- $3bn is forecast to be driven by the Olympics, $2bn by the US presidential and congressional elections, and $1bn by the Euro 2008 soccer tournament.
North America is growing at a disappointing 3%-4% a year, Western Europe is growing at 5% a year, and Japan is barely growing at all (0%-2% a year over our forecast period).
By contrast, developing markets (ie, all markets outside North America, Western Europe and Japan) are growing at double-digit rates. Between 2007 and 2010 developing markets are forecast to add an extra $49.5bn to the world ad market, while the developed markets add $37.5bn.
Zenith expects developing markets to contribute 26% of global adspend in 2007, and 31% in 2010. By which year it expects China to overtake Germany as the globe's fourth-largest ad market.
While over the three-year period, the internet will almost double its share of global adspend at the expense of most other media platforms.
Data sourced from ZenithOptimedia (UK); additional content by WARC staff