Publicis Groupe 's ZenithOptimedia is forecasting that global ad spending will reach $502 billion in 2012, a downgrade to 4.3% growth from 4.8% it predicted in March, while Interpublic Group of Cos.' MagnaGlobal is reducing its 2012 ad growth forecast 4.8% from the 5% growth it predicted in December 2011.
MagnaGlobal's growth numbers are based on a global ad market expected to reach $480 billion this year, and a U.S. market accounting for $152 billion.
Just prior to releasing its report, ZenithOptimedia adjusted its growth prediction for Spain from -5.3% to -12%. As a result, the agency adjusted its predictions for the eurozone in 2012 to -1.1% from -0.4%. It also reduced its calculations for Western Europe to 0.4% from up 0.9% -- pretty grim considering the 1.5% growth the agency had predicted for the region back in March. These late adjustments also revised total global ad-spending growth downward to 4.3% from 4.4%.
According to MagnaGlobal's study, "In Spain, this year's predicted drop of -8.4% will be the fourth year of downturn in the last five years; at the end of 2012, the Spanish market will be 37% smaller than its pre-slowdown level in 2007."
Aside from Spain, ad spending in Italy (-5.0%), Portugal (-10.4%) and Greece (-19.5%) is shrinking "as local advertisers struggle to maintain their cash reserves, and international advertisers reconsider the long-term potential of their investments," according to the ZenithOptimedia report. It added that ad spending should be flat everywhere else in the Eurozone, but in Austria (3.9%), Finland (3.2%) and Germany (2.1%) it's growing at about the rate of inflation.
"The eurozone is weighing down our predictions for Europe as a whole," the forecast stated. However, it doesn't expect the eurozone to meet disaster, "such as a break-up of the euro," this year. "On this basis, we predict eurozone ad spend will grow 2.3% in 2013 and 3.0% in 2014."
ZenithOptimedia also dropped Asia Pacific to 6.7% growth from 7.4% growth, and Latin America to 7.8% from 9.2%. In North America, spending growth holds steady at 3.6%. Growth in the Middle East and North Africa also remains steady at a low 1%, due to continued political and social unrest, the report noted.
A more positive outlook shows that global growth forecasts for 2013 and 2014 remain unchanged, at 5.3% and 6.1%, respectively. Between 2011 and 2014, developing markets (defined as everywhere outside North America, Western Europe and Japan) are set to increase their share of the global ad market from 32.8% to 36 .7%. Half of that growth will come from 10 developing markets. Beyond Brazil, Russia, India and China, which are expected to account for 35% of global growth, six developing markets set to deliver 15% of global growth include: Indonesia, Argentina, South Africa, South Korea, Thailand and Turkey.
In ZenithOptimedia's forecast by medium, internet showed the most promise, with ad spending set to rise to 21.5% in 2014 from 16% in 2011. Display is the fastest-growing subcategory, with 20% annual growth. Social and video, it noted, are driving growth. For example, the report stated that paid ads appearing within social-media sites like Facebook, Twitter and LinkedIn accounted for 14.4% of internet display in 2011. Additionally, the firm expects that internet advertising will account for 55% of the growth in total spending over the next three years.
The next biggest category is TV; the firm expects it will contribute 42% of growth. Newspaper advertising will continue to shrink an average 1.2% a year, but magazine advertising should stabilize in 2014, the firm predicted.
MagnaGlobal expects TV spending to grow by 5.2% and remain the No. 1 medium globally. According to the firm, the media will benefit from the "quadrennial" events of 2012, including the Olympics in the U.K. It predicts that internet advertising will grow 13.5% to nearly $100 billion. Internet is set to be the second-biggest media, outgrowing newspapers and reaching a 20.3% global market share.