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Global advertising heading for worst downturn in decade

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New York -- Global advertising is heading for the worst downturn since the recession of the early 1990s, according to a new report by Zenith Media. Zenith has drastically cut its forecast for the rest of the year, predicting that spending will fall 2.6%. Just two months ago it forecast a dip of just 1.5%. Zenith said the U.S., U.K., France, Germany, Italy, Japan and Spain lost a combined $8 billion in ad spending in the last business quarter. Zenith said ad growth in the seven markets will grow just 0.8% next year.Zenith predicted that advertising in the U.S. would fall by 4.2% this year. Advertising in the five European countries is forecast to decline 1.8% with the U.K. shrinking 3%.Zenith also has lowered its forecast for Internet ad spending, predicting it will grow only 10%. "Until the Internet can demonstrate to national advertisers the ability to brand on the Web, the new medium will not experience significant growth," Zenith said. The advertising agency said the main culprit in the downturn has been the decline in profitability among the world's biggest advertisers. The dot-com crash, of course, also has played a role. Last week, Sir Martin Sorrel, chief executive of London-based WPP Group plc, said he expected ad conditions to worsen before they get better and said an upturn wouldn't happen at least until the middle of 2002. The agency said the ad slowdown began with globalized packaged goods manufacturers, with television initially affected the most. Now, it's spreading to most other product categories, advertisers and media.

--Matthew Schwartz

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