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Revised ad forecasts point to greater growth

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Several media companies have recently revised upward their forecasts for global and U.S. ad spending this year and beyond. ZenithOptimedia last month predicted that global advertising will reach $489.0 billion this year, up 4.8% over last year. That was up slightly from a December forecast of 4.7% growth. Next year, global ad spending is expected to grow 5.3% (up from an earlier projection of 5.2%); in 2014, ad spending is forecast to grow 6.1% (up from an earlier projection of 5.8%), according to the report. “This upgrade is a result of two factors: Signs that large companies are investing more in marketing to drive growth and a reduced risk of disastrous collapse in the eurozone, even though its short-term economic performance has deteriorated,” said Jonathan Barnard, head of forecasting at ZenithOptimedia. Ad spending in North America is expected to reach $170.7 billion this year, up 3.6% over last year. The North American forecast was unchanged from ZenithOptimedia's December projection “since its tentative economic recovery appears on track,” Barnard said. Other regions that ZenithOptimedia predicted will see significant ad spending growth this year are: Latin America (9.2%), Asia Pacific (7.4%) and Central and Eastern Europe (6.5%). The fastest-growing medium this year will be Internet advertising, forecast to surge globally to $88.1 billion, up 16.4% over last year. By 2014, Internet advertising will make up 22.1% of total ad spending, ZenithOptimedia predicted. Also last month, global media agency Carat issued a revised ad forecast predicting that U.S. ad spending will grow 5.4% this year, up from an August projection of 4.9% growth. Carat held its global ad spending forecast steady at 6.0% growth for the year. Global ad spending will benefit this year from the “quadrennial effect” of the 2012 Summer Olympics, the U.S. presidential elections and the UEFA European Football Championship, Carat said. Next year, global ad spending is forecast to rise 5.8% and U.S. ad spending, to increase 4.8%. “Carat's latest ad spend forecasts are really encouraging,” said Jerry Buhlmann, CEO of parent Aegis Group. “Not only do they confirm our expectation for robust growth through 2012 but they also show that the global market is expected to build on that strong performance in 2013 with further growth—and in a year with no major events. Buhlmann added: “These forecasts underline our view that advertising spend is now regarded by most corporations as far less discretionary than ever before.” A third report, released by marketing intelligence company Warc, showed positive growth in global marketing budgets in March. Warc's Global Marketing Index (GMI)—created in conjunction with World Economics, an organization that provides global economic analysis and insight—was 51.5, up from 43.9 in November, when the index was launched. The index gauges sentiment regarding marketing conditions by polling 1,295 marketers in Warc's global panel. The GMI is calculated by taking the percentage of respondents that report activity has risen and adding it to one-half of the percentage that report activity has not changed. A score of 50 indicates neutral sentiment. Digital marketing and mobile marketing showed the greatest budget increases (with GMI scores of 78.9 and 71.2, respectively), while TV (48.8) and out-of-home (48.0) fell just below the no-change level. The GMI also indicated that marketing budgets for radio (42.3) and print (36.1) fell in March.
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