A slight uptick in ad spending in the worldâs developed countries, combined with surprisingly strong growth in emerging markets, should result in an overall global ad spending gain of about 2% this year, according to a new study by Nielsen Media Research International.
Ad spending in the U.S. alone is also expected to increase about 2%, after dropping 7% in 2001. The U.S. still ranked No. 1 worldwide last year, at $143 billion.
Ian Garland, managing director of product marketing and development for Nielsen Media Research International, said thereâs more bullishness among U.S. companies than expected heading into the second half of 2002.
"Marketers have recognized that the U.S. economy hasnât slowed as dramatically as they thought," he said. "While they may have been prudent in cutting their budgets last year, it appears that theyâre starting to spend again."
According to Nielsen, this yearâs first-quarter ad spending in the U.S. was up 1.8%. However, signs that the U.S. ad recession may be lifting should be viewed with caution. While there was a spike from unexpectedly heavy demand this spring for TVâs upfront market, ad spending on newspapers and magazines continued to fall.
"If you eliminate newspapers and magazines, growth would be 3.5%," said Jack Myers, chief economist, Jack Myers Report. "Theyâre dragging everything down."
Myers predicts flat ad spending in the U.S. this year and a 3.2% increase in 2003 compared with 2002. "Indications from the first quarter â02 suggest we can be more positive," he said.
Lauren Rich Fine, an ad industry analyst with Merrill Lynch, recently upgraded her forecast for U.S. ad spending this year to an increase of 0.4% from a decline of 1.5%.
Robust growth in Asia
Nielsenâs study focused on 13 countries and Hong Kong, which together represented about half of the worldâs total advertising spending.
In 2001, spending in these markets as a whole fell by 5%, with spending down a collective 7% in Australia, Canada, Germany, Italy, Spain, the U.K. and the U.S. But the overall decline masked the robust growth in many emerging markets in 2001: a combined 15% in China, Hong Kong, Indonesia, Malaysia, Singapore, South Africa and Thailand.
In industry terms, the biggest advertising increases were in cosmetics and toiletries, up 8%, and health care, up 6%. Garland said these sectors are particularly ripe in all of the emerging markets.
China has become a major global force in advertising, fueled by marketers such as Procter & Gamble Co. and Unilever. Ad spending in China grew more than 15% in 2001, topping $11 billion.
"China is clearly a great opportunity in a place fraught with danger," Garland said. "Unless you do your homework, people can lose a lot of money. But China is keen to foster an involvement with international companies."
Nielsen estimated that if China continues to grow at its present rate it will overtake Japan as the worldâs second biggest advertising market by the end of the decade.